Grant Thornton sees year-on-year growth despite Covid challenges
Grant Thornton announced a 14% year-on-year growth and average profit per partner increase in 2020, as the challenger firm rebounds from a tough 2019 and the headwinds presented by Covid-19.
Grant Thornton’s 2020 annual report strikes a more confident outlook than its interim results released at the end of 2019, where partner pay dropped to £332,000 and audit profitability also nosedive 60%.
CEO David Dunckley was more upbeat at the release of the 2020 annual report which saw the firm’s profitability improve by 14% (up from 11%), despite net income dropping to £471m. The net income is back to the same level as 2018 after rising to £483m in 2019.
The sixth largest accountancy firm also reversed 2019’s decline in average profit per member to £388,000.
Dunckley also reported a slight reduction in like-for-like revenue and increase in trading profits in 2020, which the firm recognised as a “testament to performance of its people and operational changes undertaken in preceding years”.
Focus on talent and diversity
The financials took centre stage, but Grant Thornton was keen to highlight other areas of growth within the firm; in particular the firm was proud to point out its commitment to investing in people and how it responded to pandemic.
Dunckley said the firm took the “positive decision” not to use the furlough scheme. Instead Grant Thornton asked employees to temporarily reduce their contract hours. Dunckley said that these employees have now been repaid and have received their full salary entitlement.
In response to the impact the pandemic has had on wellbeing and mental health, Grant Thornton has committed to giving all its 4,500 people two wellbeing days off in addition to their normal holiday entitlement. All employees also were awarded at least £750 in bonuses for their 2020 contributions.
Mid-sized and large firms continue to place more emphasis on inclusion and diversity. Grant Thornton efforts have seen it climb to second place the annual Social Mobility Employers Index 2020 and up 123 places on the Stonewall Index.
Its commitment to diversity and inclusion was also apparent in the 300 graduates and school leavers joining the firm in 2020, with 53% coming from non-selective state school backgrounds, nearly a third (31%) being from a minority ethnic background and almost half (48%) identifying as female.
Challenges presented by Covid-19
Like the whole of the profession, the pandemic presented many challenges for Grant Thornton. However, Dunckley said the LLP started 2020 with strong foundations which enabled the firm to enter 2021 in a stronger position.
As seen across the profession and notably in the Accounting Excellence Awards, Grant Thornton supported clients through a series of diagnostic workshops and webinars. However, the tax arm of the business had a tough first half of 2020 due to the pandemic causing a slow down in demand for services.
“Our principal focus in 2020 has been to support our people by providing a safe environment for them to serve our clients and support one another, friends and families. This has enabled us to deliver the highest possible level of client service across the firm, which in turn has delivered a solid set of results for our business, the benefits of which we have shared with our people,” said Dunckley.
Grant Thornton also provided all 4,500 employees with equipment to work from home during the pandemic, which may end up being a long term investment going by the Financial Times report that found 88% of the LLP’s employees want to spend most of their time working from home.
The firm moves forward from the pandemic with renewed confidence. Dunckley in then report’s CEO report attributes the turnaround to the introduction of an operating model where “quality, talent and value were built into everything we do”.
Dunckley’s positivity contrasts to a tumultuous year for the firm in 2019. The slashing of the average partner pay underlined a year in which restructuring plans sent 6% of partners walking and made 60 administrative staff redundant. Internal squabbles continued with the ousting of Sacha Romanovitch after she dared to overhaul the partnership structure for a profit sharing scheme.
But most notably, Grant Thornton was under fire for its audit of Patisserie Valerie and Sports Direct. The word ‘audit’ didn’t feature in Dunckley’s CEO review, but throughout the report the LLP made efforts to address audit quality. Last year Grant Thornton invested in seven new audit partners and implemented a new audit board and quality assessment framework for all partners and directors; and expanded its ethics team by 40%.
Dunckley is confident that the momentum will take the firm from strength to strength in the future.
“I am proud of the way our people responded to the challenges of 2020. To deliver such a strong result has taken a monumental effort... Whilst we know we have a small number of important legacy matters to deal with in 2021, the underlying strength and resilience of our business has meant that we have continued to invest in our future. As a result we will continue to move forward with confidence.”