DWF claims recovery underway from COVID-19 setback

Continuing organic growth despite the COVID-19 lockdown is revealed by listed legal firm DWF's audited accounts for the year to 30 April 2020.

A headline 10.9% increase in group revenue from £268.1m to £297.2m, "despite significant Q4 COVID-19 impact", included underlying organic revenue growth of 2.0%, when acquisitions during the year are excluded. In a trading update DWF also claimed strong trading for the first three months of the 2020-21 year, "with high double digit revenue growth driven by mid-single digit organic growth and contribution from acquisitions from RCD and Mindcrest".

Reported profit before tax jumped 39.6% from £13.0m to £18.2m, largely due to adjustments relating to acquisitions, but underlying adjusted profit before tax fell 32.4% from £20.3m to £13.8m – due to COVID-19, the firm commented. Its closing net debt of £64.9m, nearly doubling from the previous year's £35.3m, reflected the impact of the pandemic and "lockup days which peaked at 206 in April but have since reduced": the trading update reports current net debt of £55.2m.

A proposed final dividend per share of 0.75p will take the total proposed dividend for the year to 3.25p.

DWF further said that previously announced cost savings of £15m in 2020-21 are taking effect and are reflected in a "significant uplift" in EBITDA (earnings before interest, tax, depreciation and amortisation) versus prior year, when it fell from £27.8 to £21.8m. It has disposed, closed or reduced its scale of operations in Cologne, Dubai, Singapore and Brussels, "with further measures taken post year-end to rationalise underperforming units".

Sir Nigel Knowles, group chief executive officer, commented: "Trading through the majority of FY20 was strong and the group made significant investments to support its growth objectives. The sudden and far reaching impact of COVID-19 had a material effect on the final quarter with a resulting impact on profitability. Despite this, we delivered a solid performance with overall revenue growth of 10.9% and organic growth of 2.0%. While we achieved record group revenue, with an organic growth rate that compares to other global law firms in FY20, it was lower than expected. 

"The strength and resilience of the group and our differentiated model has been evident in the first three months of FY21. We have seen strong activity levels generating positive momentum across the business resulting in revenue and EBITDA being materially ahead of the prior year."