Shares of Manchester-headquartered international law firm DWF Group plc fell about 18% on Friday after it published a trading update showing “near term challenges” and issued news that Andrew Leaitherland willl step down as group chief executive officer with immediate effect.
Leaitherland will also step down as managing partner of DWF Law LLP and DWF LLP.
DWF’s chairman Nigel Knowles will take over as CEO.
DWF shares fell 18% to about 67p, having fallen from around 140p in early March.
“Andrew has spent over 20 years at DWF and has been CEO and managing partner of the group since May 2006,” said DWF.
“During his tenure, he has been instrumental in expanding the group from two offices in the UK to 33 offices across four continents, and achieving the successful IPO of the group in March 2019.
“In responding to the challenges created by COVID-19, the board believes that strong and experienced leadership is essential.
“The board believes that Sir Nigel Knowles, chairman, will provide this leadership and as a consequence, the board has asked Sir Nigel Knowles to assume the role of group chief executive officer with immediate effect.
“Sir Nigel has over 40 years of experience in the legal sector, including extensive experience in building a global law firm as CEO and chairman for more than 20 years.”
Chris Sullivan, DWF’s senior independent non-executive drector, has been appointed as interim chairman.
A committee of independent directors has been formed to run a selection process for a permanent chairperson over the coming weeks.
Knowles said: “I am very grateful to have had the opportunity to serve as the group’s chairman and even more honoured to have been asked now to lead the company as its group chief executive officer.
“Andrew helped build a great business for which we are very grateful and we wish him the very best.
“Whilst today’s trading update shows there are near term challenges to be overcome, there is a significant opportunity to deliver attractive returns for our shareholders by consolidating the growth achieved to date and building an even stronger global platform centred around DWF’s Complex, Managed and Connected delivery model.
“I look forward to working with the existing strong management team to both navigate through the near term challenges presented by the external environment and on executing on our stated longer term strategy.”
in its trading update, DWF said: “On 27 March 2020, the company announced that the COVID-19 pandemic was impacting its business and that it therefore expected revenue growth of between 15% to 20% for the financial year.
“In the event, the disruption experienced in April was greater than anticipated and as a result revenues grew by c.11% over the financial year.
“The impact and timing of COVID-19 gave little opportunity for remedial action in this financial year, further reducing the group’s profit expectations for FY20, with expected FY20 EBITDA of c.£34m under IFRS16, with underlying adjusted EBITDA of c.£21m, excluding the application of IFRS16.
“As experienced throughout the sector, a variety of short-term factors impacted trading in April as the worldwide lockdown affected work flows and some client demand, leading to a greater than anticipated reduction in activity for the month.
“The group has seen activity levels strengthen in May with a number of new client wins, including panel appointments, and with a good pipeline of bid activity.
“Although activity levels in April were impacted, April was the group’s strongest ever in terms of billings and cash collection, driven by a concerted action from the partners, with over £40m of billings and over £45m of cash collected.
“While April is a key cash collection month, the group is seeing this trend continue in May, supported by the high level of billings in April and strong cash collections from its institutional client base.
“As a result, period end net debt was better than expected at £64.9m, well within the group’s total available facilities of £122m.
“The group operates and expects to continue to operate within the banking covenants agreed with its lenders under the terms of the RCF.”