Law firm confident as revenues rose through difficult period

DWF, the Manchester-based law firm, expressed its pleasure with its interim figures for the six months to October 31, today, in the face of the coronavirus pandemic disruption.

Revenues at the firm rose 15.4% to £167.6m, although pre-tax profits of £8m became an £11m pre-tax loss this year. The firm said this was due to significant, largely non-cash, acquisition-related expenses treated as non-underlying items.

It reported an adjusted pre-tax profit of £13.4m, compared with £10.9m a year ago.

The figures showed a 58% growth in international revenues following the RCD acquisition in Spain, which added £15.7m of revenue, alongside organic growth of three per cent.

Revenue per partner increased by 0.4% to £446,000, on a half-year basis, despite first half investment in 15 new partners.

There was £19.6m free cash flow generated in the first half versus an outflow of £9.2m in the prior year, assisted by around £14m of COVID-19 related deferrals.

Net debt of £58.5m is £8.9m higher than the previous year, and a reduction of £6.4m versus April 20 position.

DWF also reported a five day reduction in lock-up days – the time it takes to convert work in progress and debtors into cash – versus the previous half year, and a 10 day reduction versus the full year position due to improving operational processes and client engagement.

During the six month period agreements in principle were made to reduce office space and/or vary lease terms in several locations as a first stage of the group’s new property strategy, promoting greater flexible working and securing annualised cash savings of £600,000.

However, there was an investment in the new Pune, India office, to increase headcount capacity to around 1,000 from about 500 to support the managed services build.

In May chief executive and managing partner Andrew Leaitherland departed after 14 years leading the firm. Looking ahead, the DWF board said it is pleased with the group’s performance to date in fiscal year 2021 and is increasingly confident in the outlook for the full year as the group continues to see a strong sales pipeline and anticipates a more stable trading environment in 2021.

The group’s focus on a one team culture and global mind-set is driving more connectivity both internally and with its clients, who, it says, are seeing the benefits of the group’s integrated legal and business services offering.

The board has approved an interim dividend for 2021 of 1.50p per share.

Chief executive, Sir Nigel Knowles, said: “Given the extreme impact of COVID-19 on the worldwide economy, we are pleased with the performance of the business in the first half of FY21 following the swift actions taken by the new management team.

“We are also encouraged that, despite ongoing COVID-related restrictions in a number of the markets in which we operate, November activity levels were strong.

“We have achieved strong revenue growth in the period thanks to the contributions of RCD and Mindcrest and a pleasing return to organic growth.

“Operationally, the decisive cost actions taken at the beginning of this financial year and a continued focus on cash management has seen a reduction in both net debt and lock-up days.

“These factors have combined to help us deliver a good profit performance with adjusted PBT in the first half of FY21 close to that achieved for the full year in FY20.”

He added: “We expect the uncertain macro environment to continue into 2021, although the positive news in relation to potential vaccines for COVID-19 allows some optimism for a more settled economy as we progress through next year.

“We, therefore, are increasingly confident in the prospects for the group as we look ahead to the rest of FY21 and recent client wins and panel appointments, such as those for Serco and Zurich are testament to the strength of our differentiated offering.”