DWF increases revenue but profits dive ahead of Inflexion takeover

UK listed firm faced pressure from rising interest costs and higher salaries 

Sir Nigel Knowles

DWF CEO Sir Nigel Knowles

UK listed firm DWF posted an 8.6% increase in revenue for the financial year ending in April, though profits fell by more than a third amid rising interest costs and other expenses.

Revenue hit £451.6m for the 2022/23 financial year, up from £416.1m a year earlier, but net income dropped by 38.6% to £12.4m. The results come after DWF was acquired by private equity firm Inflexion in a deal that values the legal group at around £342m, which is expected to complete in the final quarter of this year.

Sir Nigel Knowles, DWF’s group CEO, said: “Like other legal businesses, we have seen salary and inflationary pressures, the impact of interest rate increases and variable demand particularly in transactional areas. Despite these challenges, we have seen our organic growth strategy and integrated propositions continue to resonate with clients, and have also added quality businesses to the group via our acquisitions of Acumension and Whitelaw Twining.”

The jump in revenue was supported by double digital growth in its tax and private capital practices and high single digit percentage growth in its dispute resolution and financial and restructuring business, though its transactions team saw a decline in activity due to the broader economic uncertainty.

The firm said it has been seeking to strengthen its London presence and increasing lateral hires in France and other locations, which has added to direct costs. Matter lifecycles have also been lengthening, which has resulted in slower client payments and pressure on working capital.

Its connected services business grew revenue by 21.5% over the past financial year, supported by the acquisition of Acumension in September last year, which has expanded DWF’s costs management capability. However, its Mindcrest ALSP unit saw revenues fall by 7.4% due to structural changes, including a change of leadership.

The firm said it has made “meaningful progress” on its ESG strategy, reducing its Scope 1 and 2 carbon emissions by 20% and 41% respectively compared to the previous financial year. Its new offices in Pune, India and in Edinburgh are powered entirely by renewable energy. The firm is also ahead of certain diversity targets, with its overall ethnic minority representation increasing to 14% against a target of 13% by 2025.

DWF became the largest listed UK law firm when it floated in 2019 with a value of £366m.

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