DWF reports increased revenues and £42.5m Spanish acquisition

Leeds-based law firm DWF revealed better half year revenues today, and announced the acquisition of a Spanish legal firm in a deal worth £42.5m.

Announcing results for the six months to October 31, DWF said turnover rose 10% to £146.8m, although pre-tax profits of £4.7m were down from £5.3m. It said this was due to a change in its partner compensation model with the prior period on a reported basis reflecting the lower LLP-based direct cost.

Underlying adjusted profits before tax of £9.7m were a three per cent improvement on the previous year’s figure of £9.4m.

The revenue per partner increased by four per cent to £438,000, on a half-year basis, despite significant first half investment in new partners.

There was a net increase of 20 new partners in the period which will support ongoing underlying organic growth, particularly in the international division.

During the reporting period there was an acquisition in Poland, while the German operations were expanded with a Dusseldorf office.

Looking ahead, the firm has expanded its office in Newcastle, Australia, with the hire of eight lawyers and it says it has a strong pipeline of work across all divisions, with significant bid activity, including managed services opportunities.

Investment to support growth in the second half has now been made with the cost base set to be maintained for the remainder of the year.

The firm said trading through November reinforces management’s confidence in delivering expectations for the full year.

DWF also announced today that it has reached an agreement to acquire a leading Spanish law firm, Rousaud Costas Duran (RCD), for up to £42.5m in shares and cash.

The strategic acquisition will significantly expand DWF’s international capabilities via offices in Madrid, Barcelona and Valencia and provide access to an extensive network of connections in the Iberian Peninsula and Latin America.

RCD, which will bring 40 new partners and around 400 people in total, is one of the fastest growing firms in Spain and operates in the same sectors as DWF with a focus on similar capabilities.

The acquisition is expected to be accretive to adjusted earnings per share in the first full financial year post completion, which is expected to be at the end of this month.

Group chief executive, Andrew Leaitherland, said: “We are pleased with our first set of interim results as a plc.

“Our business continues to evolve in line with our strategy, with international and connected services being our key areas of investment.

“This is evident in the growth achieved in the first half of the year in these two divisions, with further investments made in key capabilities and locations where our clients need us to be, such as Poland and Dusseldorf, Germany.

“This will help to drive the business forward in the second half of this year and beyond.

“Growth in international and connected services was underpinned by a solid performance in the UK business, with insurance services delivering double digit organic growth and commercial services showing resilience in a tough market.

“We have also made progress with our managed services offering by securing a five-year contract with BT, demonstrating the success of this strand of our strategy.

“Finally, we are excited to announce that we reached an agreement to acquire a leading Spanish law firm, Rousaud Costas Duran, with whom we previously had an exclusive association which significantly expands our international capabilities.”

He added: “I am delighted to welcome our RCD colleagues to DWF in another important step for the business.

“The transaction complements the group’s existing international offering and boosts our expertise and ability to support clients in Spain, and provide access to an extensive network of connections across the Iberian Peninsula as well as Latin America.

“The acquisition is consistent with DWF’s strategy of acquiring complementary businesses with high levels of recurring revenue and strong cash generation.

“RCD will sit within the international division which remains one of the priority growth opportunities and, therefore, priority areas for the group’s capital allocation.”

He said: “RCD has a range of potential synergies with DWF, with significant capabilities and sector overlap in our three global areas of insurance, financial services and real estate. As leading legal innovators, our businesses have a strong focus on doing things differently, and this is the next logical step towards providing complex, managed and connected services globally.

“The transaction also builds on our recent acquisition in Poland, displaying our international expansion ambitions and continued delivery on our IPO priorities.”

Adolf Rousaud, co-managing partner at RCD, said: “Joining DWF provides an excellent opportunity to continue our growth and development, and we are very excited to be part of the group’s extensive international network which will give us a far broader geographic reach to support our clients.

“DWF is one of the most innovative legal businesses in the world, and what really attracted us was the cutting-edge approach to providing legal services, supported by leading people and technology. Our values and culture, as well as our strongly aligned sector focus, provide the ideal platform for our future success with DWF.”

Ignasi Costas, co-managing partner at RCD, added: “We are thrilled to be joining DWF. This represents another step in our development, which we started only 16 years ago with a commitment to innovation and entrepreneurship.

“Since then, and thanks to the trust placed in us by clients and our people alike, we have grown to become one of the main law firms in the Spanish market with a transformative approach to law.”