DWF, Manchester law giant, sees 14% revenue growth

Shares of Manchester-headquartered international law firm DWF Group plc rose about 9% on Thursday after it published a trading update for its half year ended October 31 showing “revenue growth of more than 14% versus HY20 revenue of £147m.”

DWF said: “The group has continued to enjoy improved activity levels since Q4 of FY20, which was impacted negatively by COVID-19. 

“Revenue growth for the year to date is more than 14%, as activity levels increase towards pre-COVID levels. 

“The FY20 acquisitions of DWF-RCD and DWF Mindcrest have made a strong contribution to revenue, whilst the organic performance of 1% reflects a return to growth in the underlying business over the course of H1.

“Previously announced cost-reduction initiatives have improved both gross and net margins positively. 

“Gross margin is beginning to trend ahead of HY20 and is 2pts higher than the diluted FY20 full year margin, driven by recovering activity levels and cost reductions starting to reflect in lower direct costs. 

“Strict control of overheads has also reduced the cost to income ratio by over 3pts compared to HY20 and FY20.

“In aggregate, these revenue and cost dynamics have delivered an increase in underlying adjusted EBITDA and PBT of more than 25% compared to the prior year, with underlying adjusted PBT for the half year being close to the £13.8m achieved in full year FY20 …”

DWF CEO Nigel Knowles said: “We have seen a very pleasing recovery in activity levels since the dip caused by COVID-19 in Q4 of FY20. 

“We have prioritised organic growth, acquisition integration and operational efficiency and this focus, combined with our cost reduction measures, has delivered strong profit improvement for the group. 

“We have also increased our focus on working capital and lockup and this is reflected in our net debt reduction and lockup day improvement, further strengthening our balance sheet. 

“The pipeline of work is encouraging despite the challenging economic environment, we continue to selectively hire partners to strengthen and expand our offering in key practice groups, and our clients are increasingly recognising the benefits of our integrated service offering. 

“We believe now more than ever that our combination of advisory, managed and connected services sets us apart from other legal services providers. 

“As we move into the second half of the year, we remain cautiously optimistic about H2 and will continue to deliver our strategy whilst focussing, as always, on the needs of our clients.”