Sir Nigel Knowles: 'We have taken decisive action'
DWF is closing its flexible resourcing arm and has embarked on a redundancy programme among central services staff as part a cost-cutting programme designed to save £15m in the current financial year.
The measures — which have put 15-18 roles at risk of redundancy — come as the top 25 UK firm moves to reassure investors that its finances are back on track after two profit warnings by revealing that revenue and EBITDA are ahead of both budget and prior year for the first two months of the financial year.
The firm said in a trading update released today that it had achieved organic revenue growth of 6% in May and June against the previous year with total revenue up by 21%. In addition, strong cash collection had reduced lock-up days to 197 from 208 leading to a cash balance on 30 June of £17.9m against total available gross facilities of £122m.
However, it also revealed its flexible resourcing arm, DWF Resource, to be an additional casualty of its cost-cutting measures — on 29 June it announced the closure of its Singapore and Brussels offices and the scaling back of its presence in Dubai and Cologne at the loss of 60 jobs, including those of 13 partners.
A spokesperson added that the firm had kicked off a consultation process with "groups of colleagues in central services", cuts that were in addition to those announced in June.
Former chair and current chief executive Sir Nigel Knowles said he was "pleased with the positive momentum that DWF has generated during the first two months of the year" adding: "We have taken decisive action focused on consolidating our existing operations to increase profitability, deliver cost efficiencies and improve lock-up and cash generation.”
In its update, the firm said it had identified an additional £5m of cost savings on top of £10m flagged in March and pointed out that while its discontinued operations accounted for 1.5% of its revenue in the last financial year they were responsible for a £4.5m EBITDA loss.
EBITDA, the firm added, was £3m ahead of prior year in the first two months. It put the improvement down to 'stronger revenue performance on a consistent gross margin' as well as the impact of two recent acquisitions — those of Spanish independent firm RCD and Chicago-based managed services business Mindcrest.
The update marks the latest attempt by DWF to reassure investors that its ‘complex, managed and connected delivery model’ is on track despite the adverse impact of Covid-19 that saw Knowles take over from Andrew Leaitherland as chief executive on 29 May after it admitted experiencing ‘greater than anticipated’ disruption.
‘Management's focus is on organic revenue opportunities, operating efficiencies and cash generation,’ the firm said. ‘While M&A opportunities are on pause in the short term, this remains an important part of the Company's strategy through the medium to longer term, where targeted acquisitions add synergistic value to the group’.