After enduring a tumultuous pre-pandemic financial period, listed firm DWF has today (25 May) posted encouraging revenue growth matched by an ambitious double business acquisition.
The firm announced that it has acquired Devon-based compliance training business Zing 365 Holdings for £1.8m and also agreed to buy out Barnescraig & Associates, a Canadian insurance claims and loss adjusting business, for £2.2m. DWF predicts that the new service lines will add a healthy £3m of revenue and £500k of adjusted profit before tax in the next financial year.
Revenues shot up by 13% for the 2020/21 financial year to £338m, with the firm stating that 8% of that growth is ‘organic.’ Perhaps a greater cause for cheer was DWF’s £34m adjusted profit before tax figure, a welcome 120% rebound from the £13.8m reported for the same period last year. The firm asserts that the £34m profit ‘exceeds market expectations by c.15%’.
Historically DWF has been saddled with uncomfortably high levels of debt, and while the £61m recorded this time round is a slight reduction on last year’s £65m, the figure remains daunting. DWF stipulates however that this reduction was achieved despite ‘acquisition related payments’ of £17m, which paints a rosier picture.
As a result of the firm’s promising financials, DWF’s board has recommended a final dividend for the financial year of 3p per share, taking the total dividend for the year to 4.5p per share. The firm said: ‘This is the first step towards normalising the dividend towards the target pay-out ratio of up to 70% of the group’s profit after tax.’
On the week that marked his first anniversary as chief executive of DWF, Sir Nigel Knowles said: ‘We have grown the business, transformed our profitability, improved our operational efficiency and strengthened our balance sheet notwithstanding the impact of COVID-19 during the year. These results are testament to the resilience, dedication and excellence shown by our colleagues right across the business.
‘We have very clear differentiators versus the rest of the legal sector: we are the only main market listed global legal business, we have a unique client proposition which offers integrated legal and business services, and in Mindcrest we are the only law firm to own a market leading alternative legal services provider.’
The results are no doubt a welcome return to form for DWF, after being hit particularly hard by the pandemic. The March 2020 lockdown saw DWF revise its outlook for the financial year, pruning its growth forecast from ‘between 15% to 20%’ to around 11% – a significant repositioning based on just five weeks of trading.
Then in further cost-cutting measures from April 2020, DWF closed or reduced its outposts in Cologne, Dubai, Singapore, and Brussels. Long-serving chief executive Andrew Leaitherland departed and was replaced by chair and former DLA Piper figurehead Knowles.