TIDMDWF
RNS Number : 6594Z
DWF Group PLC
25 May 2021
DWF Group plc
("DWF" or the "Company")
LEI: 213800O9QREOHTOGQ266
25 May 2021
FY21 Trading Statement
Revenue growth, profit transformation, strong cash generation
and accretive bolt-ons
for the financial year ended 30 April 2021 (FY21)
-- Group revenue of GBP338m reflects growth of more than 13%, including 8% organic growth
-- Adjusted profit before tax of GBP34m exceeds market expectations by c.15%(1)
-- Strong free cash flow generation with a 20 day reduction in lock-up days to 186
-- Net debt reduced on prior year to GBP61m (FY20: GBP65m) despite one-off outflows for deferred consideration and acquisition related payments of GBP17m
-- The Board anticipates recommending a final dividend of 3p per share
-- Resumption of M&A activity with two bolt-on acquisitions
to the Group's Connected Services division, following the year
end
DWF, the global provider of integrated legal and business
services, today issues the following trading update for its
financial year ended 30 April 2021.
The Group has continued to enjoy strong activity levels in H2,
with revenue growth for the year of more than 13% (8% organic) and
the pipeline remains robust. All divisions delivered growth in FY21
versus the prior year.
Gross profit margins increased in every division and the Group's
cost to income ratio has reduced with the combined impact of these
improvements driving a more than 120% adjusted profit before tax
uplift compared to FY20. Adjusted profit before tax of GBP34m was
c.15% ahead of market expectations(1) .
(1) DWF believes consensus PBT, prior to this announcement, was GBP29.3m
Net debt at GBP61m has reduced versus prior year despite
deferred consideration and acquisition related payments of GBP17m.
These are non-recurring outflows with only GBP7m of deferred
consideration from these past acquisitions remaining to be paid in
FY22. The FY21 payments have been funded by strong free cash flow
generation which was supported by a 20 day (c.10%) reduction in
lock-up, the metric which the Group uses to assess working capital
efficiency.
The Group also announces that it has acquired Zing 365 Holdings
Limited ("Zing365"), a compliance training business, and reached an
agreement to acquire BCA Claims & Consulting Limited, trading
as Barnescraig & Associates ("BCA"), a Canadian insurance
claims and loss adjusting business, to enhance its Connected
Services offering. Completion of the acquisition of BCA is expected
to occur by 28 May 2021. These acquisitions together are expected
to add c.GBP3m of revenue and c.GBP0.5m of adjusted profit before
tax in FY22 and are expected to be immediately earnings
enhancing.
Zing365 is a specialist provider of compliance training to
numerous sectors including Insurance and Financial Services,
delivering training through in-person and virtual live training,
plus digital, platform-based e-learning. E-learning is particularly
suitable to scaling and delivery across the Group's global
business. Total consideration of GBP1.8m (subject to working
capital and net debt adjustments) comprises GBP0.8m payable in cash
on completion, GBP0.8m payable through the issuance of new shares
subject to a phased release over a three year lock-up period and
the assumption of GBP0.2m in debt.
The Company will make an application for the admission of the
new consideration shares to the Official List of the Financial
Conduct Authority and to trading on the London Stock Exchange's
market for listed securities ("Admission"). The new consideration
shares will rank pari passu with the Company's existing ordinary
shares and Admission is expected to occur at 8.00am on 28 May
2021.
BCA, established more than 25 years ago, is one of the leading
adjusting and claims firms in Vancouver. This platform will
complement the Group's existing Toronto based adjusting and claims
business enabling the Group to serve both local and London market
clients. Total consideration is C$3.8m (GBP2.2m) payable in cash of
which C$1.5m (GBP0.9m) is payable at completion and C$2.2m
(GBP1.3m) is payable over 2 years following completion.
As a result of the Group's profit transformation, strong cash
flow and positive outlook, the Board currently anticipates
recommending a final dividend for FY21 of 3p per share, taking the
total FY21 dividend to 4.5p per share. This is the first step
towards normalising the dividend towards the target pay-out ratio
of up to 70% of the Group's profit after tax. The Group will
provide an update on its capital management strategy with the
release of its full results in July.
Sir Nigel Knowles, Chief Executive Officer, commented: "This
week marks the first anniversary of my tenure as CEO and I am
delighted with our results which show significant improvement on
the prior year and a strong performance in their own right. We have
grown the business, transformed our profitability, improved our
operational efficiency and strengthened our balance sheet
notwithstanding the impact of COVID-19 during the year. These
results are testament to the resilience, dedication and excellence
shown by our colleagues right across the business. Since my
appointment last year, we have emphasised the importance of a 'one
team' approach and it is paying off.
"We have very clear differentiators versus the rest of the legal
sector: we are the only main market listed global legal business,
we have a unique client proposition which offers integrated legal
and business services, and in Mindcrest we are the only law firm to
own a market leading alternative legal services provider. This
significant global addressable market supports our confidence that
we can continue to deliver strong growth in all of our markets,
both organically and through acquisitions.
"We have continued to align our global businesses with our core
strategy - reorganising operations in Australia, which is expected
to be earnings enhancing, and striking new exclusive associations
with firms in Singapore and South Africa. We already have
established relationships and fee earning work is underway with
these two firms and we see promising opportunities for more.
"We launched our new global operating structure on 1(st) May
which will bring efficiencies to our business and enhance our
ability to combine the services of our Legal Advisory, Mindcrest
and Connected Services to deliver bespoke solutions to our clients
with greater efficiency, price certainty and transparency. Our
results reinforce the confidence we have in the execution of our
strategy."
DWF will publish its full-year results on 21 July.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
The person responsible for making this announcement on behalf of
the Company is Chris Stefani, Group Chief Financial Officer.
For further information:
DWF Group plc
James Igoe +44(0)7971 783533
Head of Communications & IR
Maitland/AMO
Sam Turvey +44(0)20 7379 5151
Sam Cartwright
About the Company
DWF is a global provider of integrated legal and business
services provided through its three offerings of Legal Advisory,
Mindcrest and Connected Services. It has approximately 4,000 people
and offices and associations located across the globe. The Company
became the first Main Market Premium Listed legal business on the
London Stock Exchange in March 2019. DWF recorded revenue of
GBP297.2 million in the year ended 30 April 2020. For more
information visit: dwfgroup.com
Effective from 1 May 2021, the Group transitioned to a new
internal operating structure which it believes will support its aim
of becoming the leading global provider of integrated legal and
business services. DWF has moved from its previous five divisions
(Commercial Services, Insurance Services, International, Connected
Services and Managed Services) into three more streamlined and
efficient global divisions of Legal Advisory, Mindcrest and
Connected Services.
Together, the three divisions support DWF's single Integrated
Legal Management approach through which the Group can seamlessly
combine any number of these services to deliver bespoke solutions
to its clients with greater efficiency, price certainty and
transparency. This approach enables DWF to offer clients solutions
that combine traditional law firm services with new, modern legal
and business services relevant to today's companies and the
challenges and opportunities they face.
Forward looking statements
This announcement contains certain forward-looking statements
with respect to the Company'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.
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END
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May 25, 2021 02:00 ET (06:00 GMT)
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