DWF reports strong performance in 2020-21 results

Listed global legal business DWF has reported a strong financial performance for the 2020-21 financial year.

Group net revenue growth for the 12 months to 30 April 2021 was up by 14%, with 8% organic growth, to £338.1m, while gross profit at £171.8m, and adjusted profit before tax at £34.2m, jumped by 21% and 125% respectively. (Reported profit before tax is a loss of £30.6m, "due to significant, largely non-cash, acquisition and closure/scale back related expenses treated as non-underlying items".) EBITDA (earnings before interest, tax, depreciation and amortisation) were up by 57% from £36.9m to £58.1m.

Last year the group reported a 10.9% revenue increase, with organic growth of 2%, and adjusted profit before tax down from £20.3m to £13.8m, due to a significant COVID-19 impact.

Net debt is down by £4.7m but still amounts to £60.2m; lockup days, which peaked at over 200 in April 2020, have come down by 20; and cost to income ratio improved by 2.2ppts to 39.2%. Net revenue per partner increased by 18% to £924,000.

The group said that trading performance throughout the year had been "resilient, with minimal impact from ongoing COVID-19 restrictions", and with strong performance continuing into the first months of the current financial year. "Whilst there is upward cost pressure due to competition for talent in a buoyant legal sector, the removal of material drag factors (i.e. closures and scale-backs in FY21) is expected to support continued growth in net profitability."

As previously announced, the board has declared a final dividend of 3.0p per share, taking the total dividend for the year to 4.5p, a ratio of 61% of adjusted profit after tax and "a meaningful step towards the target of up to 70%".

Chief executive officer Sir Nigel Knowles, who took over at the start of the financial year, commented: "FY2020/21 was a transformational year for DWF and I am delighted that the tremendous resilience, dedication and excellence of our colleagues has been rewarded with these strong results. The results reflect a return to pre-COVID-19 activity levels, but they also evidence the importance of the decisive actions we took throughout the year as we focused on driving greater operational efficiency, profitability and strategic alignment. 

"I am especially pleased to see revenue and gross profit margin growth in every division of the group. This demonstrates the strengths we have right across the business, the broad appeal of our offerings in their own right, and how these can be even more powerful when combined through our differentiated integrated legal management approach.

"We have now implemented our new global operating structure to streamline the group into three global divisions of Legal Advisory, Mindcrest and Connected Services. We believe this is an important step forward in our strategy and will help us to fulfil our vision of becoming the leading global provider of integrated legal and business services." 

• CMS, another global practice, has reported a 3% increase in revenue to €1.475bn for the 2020 calendar year, with its UK turnover in the year to 30 April 2021 up by just £1m to £567m. The previous two years saw global growth of 4.5% in 2019 and 5% in 2018. Chairman Pierre-Sebastian Thill said the firm's "robust" performance throughout the pandemic demonstrated its strength and resilience working in the "toughest of operating environments".