City round-up: DWF; Warehouse REIT, Lookers
DWF, the listed Manchester law firm, revealed an improved performance for the year to April 30, in a trading update today, and two acquisitions.
The group continued to enjoy strong activity levels in the second half of the fiscal year, with revenue growth for the year of more than 13% and the pipeline remains robust. All divisions delivered growth versus the prior year.
Gross profit margins increased in every division and the group’s cost to income ratio has reduced with the combined impact of these improvements driving a more than 120% adjusted profit before tax uplift compared with 2020. Adjusted profit before tax of £34m was around 15% ahead of market expectations. DWF said it believes consensus profit before tax, prior to this announcement, was £29.3m.
The group revealed today that it has acquired Bristol-based Zing 365 Holdings Limited, a compliance training business, and reached an agreement to acquire BCA Claims & Consulting Limited, trading as Barnescraig & Associates, a Canadian insurance claims and loss adjusting business, to enhance its connected services offering.
These acquisitions are expected to add circa £3m of revenue and approximately £0.5m of adjusted profit before tax in fiscal year 2022 and are expected to be immediately earnings enhancing. Total consideration for Zing 365 is £1.8m. The total consideration for BCA is £2.2m.
DWF said that, as a result of its profit transformation, strong cash flow and positive outlook, the board currently anticipates recommending a final dividend of 3p per share, taking the total dividend to 4.5p per share. 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.
Chief executive, Sir Nigel Knowles, said: “This week marks the first anniversary of my tenure as CEO and I am delighted with our results which show significant improvement on the prior year and a strong performance in their own right. These results are testament to the resilience, dedication and excellence shown by our colleagues right across the business.”
DWF will publish its full-year results on July 21.
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Andrew Bird
AIM-listed property company Warehouse REIT, which operates from Chester, reported a robust financial performance with strong valuation uplift in its year to March 31, today.
Revenues rose from £30.1m to £35.8m, while IFRS pre-tax profits soared from £20.7m to £123.1m. The dividend remains at 6.2p per share, in line with target.
The company achieved a strong rent collection performance, with 98.6% of the rent due in relation to the year collected as at May 24, 2021, and it raised gross proceeds of £153m through an equity issue in July 2020 and a further £45.9m through a placing in February 2021.
Its total portfolio was valued at £792.8m at March 31, 2021, representing an 18.8% like-for-like increase.
Warehouse REIT chairman, Neil Kirton, said: “This was an important year in the group’s development, during which we raised nearly £200m through well-supported equity issues. We have made excellent progress with deploying this capital, while maintaining our strong capital discipline.
“We also continue to add value through active asset management and look forward to delivering for shareholders and our wider stakeholders in the coming year.”
Andrew Bird, managing director of the investment advisor, Tilstone Partners, said: “The group’s successful rent collection throughout the COVID-19 pandemic demonstrates the resilience of the occupier portfolio and the economic relevance of the real estate.
“The pandemic has reinforced the attractions of the market, in particular by materially accelerating the growth of e-commerce, which is a key source of demand for warehouse space. We remain confident in our ability to add further attractive assets to the portfolio and to extract additional value from the group’s existing holdings.”
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Mark Raban
Altrincham-based motor dealership Lookers said it expects its annual underlying profit before tax for 2021 to comfortably exceed current market consensus, of £34m.
It also announced in its trading update today that it has completed the renewal of its bank facility with its existing banking club. The revolving credit facility now runs until September 30, 2023, and is for an initial amount of £150m. The group’s net debt is currently circa £4m.
Lookers said, building on the momentum of the first quarter of 2021, trading across the group has been strong since the reopening of its dealerships on April 12.
It has benefited from strong consumer demand combined with significant market out-performance and has also seen improved gross margins and the ongoing benefit of its cost reduction initiatives.
Today’s update said year end procedures with new auditors, BDO, are progressing as planned, and the group will release its audited preliminary results for the year ended December 31, 2020, in the second half of June.
Following the publication of these results, against a backdrop of COVID-19, the group will return to a normalised reporting calendar, with its 2021 interim results scheduled for September.
Chief executive, Mark Raban, said: “It’s encouraging to see our strong trading momentum continuing with a very positive customer response following the reopening of our dealerships.
“The steps we have taken to evolve and enhance our digital offer are being well received and we have a number of further developments in the pipeline. I would like to thank the fantastic Lookers team for their considerable efforts in what has been a very busy period for the business.”
He added: “We are pleased to have renewed our banking facility and thank our banking partners for their continued support.”
