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COVID 19: An update on our business

27 March 2020
DWF Group plc ("DWF" and, together with its subsidiaries and subsidiary undertakings, the "Group"), a global legal business, today provides an update on the impact of the COVID-19 pandemic on its business.
 

The health and wellbeing of our people and clients is paramount, and steps have been taken to enable all of our c. 4,200 people to be able to work on an agile basis in order to follow lockdown and self-isolation measures and to mitigate the impact on client service. Client feedback has been very positive and has generated a number of new opportunities that will benefit the Group in the year ahead, as the investment we have made in our delivery platforms has helped the Group to provide a wider range of services to clients.

Whilst the Group has, to date, shown strong revenue growth year on year, the final quarter of each financial year is typically the most important to the Group's financial performance, and has coincided with the COVID-19 outbreak in the Group's key markets.

As a consequence, the Board now estimates that Group revenue for the financial year ending 30 April 2020 (FY20) as compared to the prior financial year (FY19) will show high single-digit organic growth and total growth of between 15% and 20%, which is below management's previous expectations. Although the Group continues to expect double-digit percentage growth in underlying adjusted PBT this year, it expects a material impact on the expected FY20 profits due to lower than expected revenue and the level of investment made during the year to grow the platform.  The Group has already implemented cost savings during the course of the year and has accelerated its cost saving programme which is expected to deliver c.£10m in cash savings during FY21 and annualised savings of £13.5m in FY22.

The payment of any final dividend for FY20 will be determined later in the year once the Group's financial results for FY20 are known and have been considered by the Board.    

The Group invested through FY20 in its extensive lateral hire programme, increasing partner headcount on a net basis by 28 year to date, excluding those partners who joined through acquisition. Due to the current environment, partners who have joined recently are taking longer to ramp up their practices than would normally be the case but the Board are confident that, as the normal business environment returns, new joiner productivity will progress as had previously been anticipated.

Given it is uncertain when the market dislocation will end, management are keeping their expectations for FY21 under review.

The Company's revenues are generated from a diversified set of service lines and geographies, with a substantial proportion generated from litigation and related practice areas, which are less affected by the economy. Certain divisions and geographies have however experienced an impact from the market disruption caused by the COVID-19 pandemic.

International and Insurance will deliver most of the revenue growth in this financial year. As anticipated, International will deliver the strongest growth, albeit the Group has begun to experience issues in a number of locations as a result of COVID-19. Insurance, with its strong counter-cyclical offering, is trading ahead of management expectations. Connected Services is also expected to see revenue growth in FY20 whilst Commercial Services is now expected to be flat - corporate, finance and real estate have all been adversely impacted by COVID-19, with this partially offset by a strong performance from litigation.

As the Group expects that it will generate lower than anticipated profits in FY20 it also expects net debt at the year-end to be higher than anticipated. The Group is very focused on working capital management and cash collections, however management anticipate that the current business environment will slow collections. Management is confident that the Group has sufficient liquidity to deal with current working capital requirements.

The Group has a Revolving Credit Facility with HSBC, NatWest and Lloyds of £80m and currently expects to continue to operate within the limits of that facility.  Notwithstanding that expectation, the Board believes it prudent to seek additional contingency facilities from its lenders to ensure that the Group has increased headroom for working capital purposes and a relaxation of certain covenants for a period of time. The Group has a strong relationship with its lenders and has had positive initial discussions, which are ongoing. 

The Group has a resilient, counter cyclical business model that benefits from significant recurring revenues from institutional clients in its key industry sectors of Insurance, Financial Services and Real Estate. While the current environment is unprecedented, the Board is confident that the Group is well placed to continue to provide best service to its clients and benefit from future opportunities when the business environment normalises.

For further information

DWF Group plc

James Igoe - Head of Communications                 

+44 (0)20 7280 8929

 

Finsbury (PR advisers to DWF)

Ed Simpkins                                                                     

  +44 (0)20 7251 3801

Charles O'Brien

 
The person responsible for arranging for the release of this announcement on behalf of the Company is Chris Stefani, Group Chief Financial Officer.

 
About DWF

DWF is a global legal business providing Complex, Managed and Connected Services, operating from 33 key locations with approximately 4,200 people. The Company became the first Main Market Premium Listed legal business on the London Stock Exchange in March 2019. DWF recorded revenue of £272.4 million in the year ended 30 April 2019. For more information visit: www.dwf.law 

Forward-looking statements

This announcement contains certain forward-looking statements with respect to the Group's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan" "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. The Company does not assume any obligation to update or correct information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.

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