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‘Things are looking pretty good’: DWF continues recovery with strong half-year results after tumultuous 2019/20

DWF has continued its recovery in 2020/21, according to the firm’s half-year results, following a torrid year that saw debts rise and underlying profit plunge. 

The results announced today (10 December) reveal net revenue standing at £167.6m for the H1 period ending 31 October, an impressive increase of 15% on the £145.2m the firm posted for the same period last year. The firm’s organic revenue growth, meanwhile, stood at 3% while gross profit recorded a double-digit hike, rising almost 14% to £83.1m.  

Adjusted earnings before interest, taxes, depreciation and amortization also performed strongly, rising 17% to £24.7m from £21.2m in H1 of last year. Adjusted profit before tax likewise grew; up 23% to £13.4m from £10.9m.  

The figures we have recorded, of 15% revenue growth and 3% organic growth, stack up well against any of the peers in our group,’ firm CEO Sir Nigel Knowles told Legal Business. ‘Net debt is also continuing to come down and we are embedding a one-team culture across the firm that sees work shared across jurisdictions, offices, and practices, which has likely helped with the organic revenue growth.’ 

While the firm is still saddled with more debt than in H1 of last year, with the figure standing at £58.6m compared to £49.5m, it is significantly reduced from its £64.9m peak in April. A significant contributor to the firm’s rising debt level over the last calendar year has been large acquisitions – such as its £14.2m Mindcrest purchase and the £50m it invested in Spain – taking place just prior to the pandemic.  

However, according to Knowles the material output of Mindcrest has been a key component in its recent financial recovery: ‘We’ve seen business arising out of Mindcrest and have been generating revenue and improving margin from it. Clients are eager to see how we can help with managed services and the Mindcrest environment.’ 

‘Our managed services proposition is really starting to land with clients,’ add COO Matthew Doughty.GCs are increasingly under pressure to make cost savings and our managed services solution is helping them do that.’ 

Overall, the results continue a strong recovery for the UK’s largest listed law firm, which was forced to put in place a series of efficiency measures towards the end of 2019/20 after debt soared and underlying profits dived. According to the firm’s CFO, Chris Stefani, the Covid-enforced cost saving measures DWF adopted could be rolled back meaning parts of the business will ‘switch back on as things normalise.’  

As a result, Knowles is sanguine: ‘Other than litigation and big projects and large investigations no firm really has a massive pipeline of work at the moment. It’s all down to sentiment and confidence. We still have Brexit to get through and we need to get people vaccinated against Covid-19, but I think in terms of sentiment, things are looking pretty good.’