Legal business DWF says coronavirus pandemic means its full year revenue performance will not meet expectations
THE legal business DWF, which has an office in Leeds, today said that its full year revenue would be below management expectations due to the impact of the coronavirus pandemic.
DWF Group has provided an update on the impact of the COVID-19 pandemic on its business.
The statement said: "The health and wellbeing of our people and clients is paramount, and steps have been taken to enable all of our 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 per cent and 20 per cent, 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.
"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.
DWF said it 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.
It added: "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."