Listed law firm issues bullish trading update for first quarter of new financial year
DWF has reported rises in revenue in spite of the “sudden and far reaching impact of COVID-19” on the firm’s profitability in the final quarter. The listed law firm also issued a bullish trading update this morning for the first quarter of the new financial year.
DWF delivered a 10.9% increase in net revenue from £268.1 million to £297.2 million for the year to 30 April 2020. Its latest audited financial results, which had been delayed due to the pandemic, also reveal organic revenue came in lower than expected, with modest growth of 2%. Gross profit was down marginally by 0.8% from £143.4 million to £142.2 million.
The firm closed with net debt of £64.9 million, a rise of £29.6 million on the previous year.
Chief executive Sir Nigel Knowles said in a statement:
“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%.”
Further, the legal business said “strong trading” in the three months to 31 July 2020 (DWF’s first quarter) helped offset the economic impact of the coronavirus. Net revenues were up 20.3% from £70.1 million to £84.3 million in the three months to 31 July 2020 — almost double the increase recorded across last year as a whole. Organic revenue grew 5% year-on-year, while gross profit jumped 17.2% to hit £41.5 million.
These results comes off the back of its £40 million acquisition of Spanish law firm Rousaud Costas Duran in December, and £14 million purchase of US-based legal and managed services business Mindcrest in January.
DWF also revealed net debt had dropped to £55.2 million, reflecting a £9.7 million reduction on the April 20 position.
“The strength and resilience of the group and our differentiated model has been evident in the first three months of FY21,” continued Knowles, who took over from long-serving leader Andrew Leaitherland in May this year, to respond to the challenges presented by the coronavirus pandemic. “We have seen strong activity levels generating positive momentum across the business resulting in revenue and EBITDA [earnings] being materially ahead of the prior year.”
He added: “Having spoken with many of our stakeholders, I am very pleased that our new focus has such strong support and remain positive about DWF’s future prospects.”
Following today’s update, DWF’s share price currently sits at 63.1p, which is down from a pre-COVID market high of 143p. It hit a low point in July coming in at 46.2p.