DWF bounces back with two key bolt-ons and earnings up 120%
After a tumultuous financial period leading up to the pandemic, publicly traded company DWF posted encouraging revenue growth today (May 25), accompanied by an ambitious double company acquisition.
The company announced that it has acquired Devon-based compliance training company Zing 365 Holdings for £ 1.8 million and agreed to sell Barnescraig & Associates, a Canadian insurance claims and loss adjustment company, for £ 1.8 million £ 2m to buy. The DWF predicts the new service lines will generate £ 3m in revenue and an adjusted pre-tax profit of £ 500,000 in the next fiscal year.
Revenue rose 13% to £ 338 million in FY 2020/21. The company said 8% of this growth is “organic”. Perhaps more of a bigger cause for joy was the DWF’s adjusted pre-tax profit of £ 34m, a welcome 120% rebound from the £ 13.8m reported in the same period last year. The company claims the £ 34 million profit “exceeds market expectations by approximately 15%”.
The DWF has had an uncomfortably high level of debt in the past and while this time around £ 61million is a slight decrease from £ 65million last year, the number remains daunting. However, the DWF envisages that this reduction was achieved despite “acquisition-related payments” of £ 17 million, which paints a rosier picture.
Given the company’s promising financial results, DWF’s board of directors has recommended a final dividend for the fiscal year of 3p per share, bringing the total dividend for the year to 4.5p per share. The company said, “This is the first step towards normalizing the dividend towards the target payout ratio of up to 70% of net income.”
On the week marking his first anniversary as managing director of DWF, Sir Nigel Knowles said, ‘We’ve grown the business, changed our profitability, improved our operational efficiencies and strengthened our bottom line despite the impact of COVID-19 throughout the year. These results are testament to the resilience, dedication and excellence of our colleagues across the company.
‘We have very clear differentiations from the rest of the legal sector: we are the only major market listed global legal business, we have a unique client offering that offers integrated legal and business services, and in Mindcrest we are the only law firm that we own market-leading alternative legal service provider. ‘
The results are undoubtedly a welcome return to form for the DWF after being particularly hard hit by the pandemic. With the lockdown in March 2020, the DWF has revised its outlook for the financial year and lowered its growth forecast from “between 15% to 20%” to around 11% – a significant repositioning based on just five trading weeks.
In further cost-cutting measures from April 2020, the DWF closed or reduced its outposts in Cologne, Dubai, Singapore and Brussels. Long-time managing director Andrew Leaitherland resigned and was replaced by DLA Piper’s chairman and former figurehead Knowles.