DWF reports profit turnaround after office closures

Adjusted profit at listed firm DWF more than doubled last financial year – despite acquisitions and office closures resulting in a £30m statutory loss.

According to results for the year ended 30 April, adjusted profit before tax rose by 125% to £34.2m and revenue grew by 12% to £400.9m. Net debt also decreased by £5m to £60m, and the firm’s gross profit margin rose to 50.8% from 47.9%.

However, DWF reported a statutory loss before tax of £30.6m, driven by closures, scale backs and historical acquisition costs, which were treated as non-underlying items. The firm said the adjusted metrics show a material improvement in profitability despite absorbing the trading losses.

DWF underwent a major regime change following the appointment of Sir Nigel Knowles as chief executive in May last year. Under Knowles’ leadership, the firm has closed multiple international offices and scaled back the operations of several more. 

Chairman Jonathan Bloomer said the ‘difficult decisions’ made by the new management team ‘have been a contributory factor in the improved gross profit this year, but also provide the group with a platform to deliver further sustainable profitable growth in the future.’ Office closures removed annualised EBITDA losses of around £7m from the group.

In a statement, the board said it is ‘delighted’ with DWF’s FY2020/21 financial performance, which ‘reflects a more focused delivery of the strategy, greater operating discipline, a significant adjusted profit improvement and a robust balance sheet. These factors, alongside the implementation of a new global operating model, set the group up well to meet medium term aspirations to further enhance net profit margins whilst deleveraging the balance sheet.’

Knowles added that mergers & acquisitions are now back on the table, after they were 'put on hold' in May 2020. 'M&A will remain an important element of our growth strategy and I am confident that we will be an active participant, in a market that we believe will continue to consolidate, as we look for opportunities to further build our global presence where it is needed and to strengthen our capabilities,' he said. 

DWF is the only law firm listed on the main London Stock Exchange. DWF Group shares opened marginally up at 109.6p today.