Law firms have been consolidating and increasing their geographic reach to take advantage of an increasingly globalised marketplace. Nine months on from its March listing, DWF (DWF), which already offers its legal services from 28 locations, continues to expand, announcing another acquisition on the same day as its half-year results.
Because DWF works across several industries, it said it had both benefited from Brexit uncertainty and lost business as a result of lower deal volumes. The highest-earning division, commercial services, had flat turnover at £55.2m and saw a 9 per cent fall in gross profit to £32.3m, while partner departures also hit the division.
The company was more positive about the international and ‘connected services parts of the business. The international gross profit margin fell from 43.4 per cent to 42.1 per cent, which DWF said was down to “weaker performances” in Germany and Dubai. Revenue in the division was up 28 per cent to £33m partly thanks to expansion in Poland and Australia. The new acquisition is a Spanish firm called Rousaud Costas Duran that brings in 40 partners at a cost of “up to” €50.5m (£42.1m) in cash and shares.
Consensus forecasts compiled by Bloomberg have April 2020 revenue at £316m, a 16 per cent rise year-on-year, and see DWF’s full-year operating profit almost tripling to £40.5m compared with FY2019.
| DWF (DWF) | ||||
| ORD PRICE: | 124p | MARKET VALUE: | £372m | |
| TOUCH: | 124-127p | 12-MONTH HIGH: | 132p | LOW: 115p |
| DIVIDEND YIELD: | na | PE RATIO: | 34 | |
| NET ASSET VALUE: | 13.4p | NET DEBT: | 123%* | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018** | 157 | 5.3 | 2.00 | nil |
| 2019 | 174 | 4.7 | 1.20 | 1.25 |
| % change | +11 | -11 | -40 | - |
| Ex-div: | 21 Nov | |||
| Payment: | 20 Dec | |||
| *Excludes lease liabilities of £82m **Pre-IPO †Second half-yeae dividend announced in February | ||||
