GRANT THORNTON UK LLP ANNUAL REPORT 2016 FOR THE YEAR ENDED 30 JUNE 2016 Grant Thornton UK LLP Annual Report for the year ended 30 June 2016 2 CONTENTS 1. CEO STRATEGIC UPDATE Pg3 8 CONSOLIDATED STATEMENT OF CASH FLOW Pg26 2. BUSINESS AND FINANCIAL REVIEW Pg10 9. NOTES TO THE CONSOLIDATED Pg28 FINANCIAL STATEMENTS 3. MEMBERS’ REPORT Pg13 10. STATEMENT OF FINANCIAL POSITION Pg81 4. INDEPENDENT AUDITOR’S REPORT TO FOR THE PARENT ENTITY THE MEMBERS OF GRANT THORNTON UK LLP Pg15 11. STATEMENT OF CHANGES IN EQUITY Pg83 5. CONSOLIDATED STATEMENT OF FOR THE PARENT ENTITY COMPREHENSIVE INCOME Pg20 12. NOTES TO THE PARENT ENTITY Pg85 6. CONSOLIDATED STATEMENT OF Pg22 FINANCIAL STATEMENTS FINANCIAL POSITION 13. INDEPENDENT AUDITOR’S REPORT TO THE 7. CONSOLIDATED STATEMENT OF Pg24 MEMBERS OF GRANT THORNTON UK LLP Pg96 CHANGES IN EQUITY Grant Thornton UK LLP is a limited liability partnership registered in England and Wales with registered number OC307742. A list of members’ names is available for inspection at Grant Thornton House, Melton Street, Euston Square, London NW1 2EP, the firm’s principal place of business and registered office. Grant Thornton UK LLP Annual Report for the year ended 30 June 2016 3 1. CEO STRATEGIC UPDATE CEO FOREWORD We have set a bold strategic agenda anchored in our purpose of helping to shape a vibrant economy, grounded in the belief that great businesses work holistically to contribute to the system on which their sustainable growth depends. The energy and passion of our people, the support from our clients, challenge and insight from our wider stakeholders have all played a vital part in this first year of delivering on our agenda. At times it has felt hard – and yet we remain confident that our strategy remains the right one to create value for our clients, our people and the communities we serve. As they say, if it was easy it would have already been done. As with any bold plan, the start requires WE HAVE STARTED TO PLAY OUR PART IN SHAPING investment and commitment to lay strong A VIBRANT ECONOMY foundations to deliver sustainable results into the future. This report is framed “We care about the work we do for significant – if the UK performed at the around three key aspects: clients, the way we treat our people same level as the G7 average then an and the impact we have in society. additional £479bn would be generated • how we have started to play our part By unlocking the potential for growth for the UK economy by 2025. in shaping a vibrant economy in our people, our clients and our We believe there are three areas where communities, we will work to shape • the work we have undertaken to ensure we can make most impact in shaping a a vibrant economy where businesses that quality, excellence and ethics are vibrant economy: at the heart of what we do and people can flourish.” • building trust and integrity in markets Our continued success and growth • how, as a progressive business, is vital in securing investment and for depends on us working with clients who we have delivered against the goals innovation to take hold we set this time last year. are growing and changing in an economy that is thriving. Living our purpose is our • making sure we have dynamic opportunity to ensure that we act to businesses growing, expanding, influence the system not just operate generating jobs and creating a positive within it. We know that we can achieve financial and social impact on the this through who we work with, the work communities they serve we do, what we speak out on and how • creating an environment where we are as a business ourselves. Given businesses and people can flourish – we advise over 56% of the FTSE 100, from transport and healthcare are the leading auditor in the public sector through to education. and our private sector clients employ more than 6.2m people in the UK, we This year we have made substantial know that we can use our power to progress in how we bring our purpose convene people from different walks of to life and you will notice this throughout life to work together to deliver change. our commentary on the implementation The unlocked potential in the UK is of our strategy. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. ‘GTIL’ refers to Grant Thornton International Ltd (GTIL). Grant Thornton UK LLP is a member firm of GTIL. GTIL and each member firm of GTIL is a separate legal entity. GTIL is a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. GTIL does not deliver services in its own name or at all. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s act or omissions. The name ‘Grant Thornton’, the Grant Thornton logo, including the Mobius symbol/ device, and ‘Instinct for growth’ are trademarks of GTIL. All copyright is owned by GTIL, including the copyright in the Grant Thornton logo; all rights are reserved. Grant Thornton UK LLP Annual Report for the year ended 30 June 2016 4 WHO WE WORK WITH Our focus is on All of our work in this area can impact on WHAT WE DO FOR CLIENTS We set out working with businesses across the our reputation – particularly as we move in our strategic review how we take an private, public and third sector that will to work with higher profile organisations. ‘outside in’ perspective on the world. To contribute to driving economic growth. We need to choose wisely who we work look at and anticipate themes that will be We call these dynamic organisations. with, what we do with them and continually important for a vibrant economy and for We are actively seeking to work more assess if any new information has arisen our clients within it. To purposefully invest with such businesses. We will stop working that changes our view. in new areas of service and capability to with businesses that are not interested support our clients growing into the future. To guide us in selecting the clients we in progression and who do not value This year we have been implementing work with, we have our Code of Conduct the services we can provide so we plans to expand our capabilities around and client take on processes which codify can focus our energy and resources five key areas that we believe are the considerations that go into choosing on those that do. important and valuable for our clients: to act for a particular client. We have We have also considered carefully who updated both of these in light of our • enabling clients to make better informed we work with, particularly where we work purpose and we are introducing additional decisions using robust economic data with those in the broader public interest. steps in documenting and challenging • supporting the leadership of our client Typically our work in this area can be our thinking around taking on work and organisations as they lead change and loosely categorised as follows: clients that fall into the public interest. improve governance • ORGANISATIONS THAT ARE GROWING, In such cases, there are multiple aspects • advising high growth firms through SCALING AND FACING CHALLENGES to consider beyond pure compliance every stage of their growth journey AS THEY GROW – often in how they with the basic requirements set out operate in a sustainable and profitable in legislation. • enabling our clients to maximise way. They won’t be perfect, they’ll be opportunities internationally through Specifically, we consider the on a journey and need support and our relationships with other firms circumstances of a particular client challenge to get there situation, the direction of travel of their • developing our assurance services to • BUSINESSES THAT ARE IN DISTRESSED business or organisation, the focus on maximise value to our clients’ strategic SITUATIONS – we have a strong track management of the business and their direction and operational efficiency. record of success in working with appetite and commitment to implementing We are also clear on what we do not do. businesses in need of turnaround and change. This is then set alongside an Specifically, we will not work with clients restructuring, as exemplified in our assessment of our capability, our ability who wish to avoid paying their fair share of award winning work with Kodak in the to influence, whether our people would tax through relying on artificial structures. restructure of their pension scheme want to work for the client and whether following the business entering Chapter we can deliver the work at a suitable 11. And yet such situations are not risk return to ensure we can dedicate the free, turnarounds don’t always work right level of resources to delivering despite our best efforts high quality work and advice. • WORKING WITH REGULATORS, The consequence of our approach is that INDUSTRY BODIES AND SOMETIMES we will continue to turn down opportunities INDIVIDUAL COMPANIES WHERE that do not fulfill these criteria. Adopting THERE HAVE BEEN FRAUDS, CRIMINAL this strategy ensures that we deliver ACTS OR MAJOR BREACHES OF sustainable growth. COMPLIANCE OR TRUST – here our role is in restoring trust and integrity, ensuring that the markets are able to bring to account those responsible and put in place measures to ensure that such situations don’t happen again in the future.