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Built for
strength
and
resilience
DWF Group plc
Annual report and
financial statements 2020
DWF Group plc
Annual report and financial statements 2020
Our purpose
Our purpose is to transform legal services through our people
for our clients. That’s why we are transforming our own business,
with technological innovation, outstanding sector specialists and
advanced working practices. This translates into an entirely new,
resilient, business model that benefits from significant recurring
revenues from institutional clients in our key industry sectors
of Insurance, Financial Services and Real Estate.
While the current environment is unprecedented, the Board
is confident that the Group is well placed to continue to provide
best service to our clients and benefit from future opportunities
when the business environment normalises.
We are built for both strength and resilience.
Strength and resilience are directly interlinked within
DWF, throughout this report, this icon highlights
examples of how we put this in to practice.
For the latest new releases and video
presentations please see dwfgroup.com
01
Highlights
Solid performance
Revenue
£297.2m
+10.9%
Operating Profit
£22.2m
+46%
Underlying adjusted PBT4
£13.8m
-32%
Revenue per partner1
£784.3k
-9%
Cost to income ratio2
42.6%
-0.1ppts
Underlying adjusted EBITDA3
Reported PBT
£21.8m
-22%
Gross profit margin
47.9%
-5.6ppts
£18.2m
+40%
Net debt5
£64.9m
+£29.6m
1. Revenue per partner is calculated by dividing revenue by the FTE number of partners at the end of the financial year.
2. Cost to income ratio is defined in note 2 of the financial statements.
3. Underlying adjusted EBITDA is defined in note 2 of the financial statements.
4. Underlying adjusted PBT is defined in note 2 of the financial statements.
5. Net debt excludes lease liabilities.
Strategic report
02 DWF at a glance
04 Chairman’s statement
06 Group Chief Executive Officer’s report
10 Our market drivers
12 Our business model
14 Our stakeholders
18 Strategy at a glance
20 Strategy in action
28 Key performance indicators
30 Financial review
35 Responsible business at a glance
36 Sustainability report
44 Non-financial information statement
45 Risk management
47 Principal risks and uncertainties
48 Viability statement and going concern
Governance
50 Chairman’s introduction
51 Corporate governance at a glance
52 Board of Directors
54 Our leadership team – DWF’s Executive Board
57 Corporate Governance report
64 Nomination Committee report
67 Audit Committee report
71 Risk Committee report
73 Directors’ Remuneration report
92 Directors’ report
97 Directors’ responsibility statement
Independent Auditor’s report to the members of DWF Group plc
Financial statements
98
106 Consolidated income statement
106 Consolidated statement of comprehensive income
107 Consolidated statement of financial position
108 Consolidated statement of changes in equity
109 Consolidated statement of cash flows
110 Consolidated notes to the financial statements
153 Company statement of financial position
154 Company statement of changes in equity
155 Company notes to the financial statements
Other information
157 Shareholder information
158 Corporate information
159 Principal offices
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 02
DWF at a glance
Who we are
and what
we do
Innovation is at the forefront of our strategy to provide
a competitive and differentiated offering for our clients.
We believe innovation will help us become the chosen
partner for outsourced legal and Connected Services.
As a listed company, we now have a remuneration model
which includes equity incentives for our partners and fee
earners that we believe is unique amongst our peers.
Our three delivery
platforms: Complex,
Managed, Connected
These are at the heart of our
integrated offering, adding value
for our clients.
Complex
We offer clients premium legal advice,
expertise and attention. Complex law
has always been a mainstay
of our business.
Managed
We handle process-orientated legal
work – but we do it differently. Our
Managed Services team takes day-to-day
law and manages it better. We make it
more predictable and consistent, smoothing
and streamlining processes. We also
make it more cost- and time-efficient,
through logical process mapping and
a technology-enabled platform.
Connected
We offer a wide range of additional
products and services through our
Connected Services division, allowing
clients to consolidate their supply chain.
These products and services include
a digital claims platform and software
solutions, as well as specialist lawyers
and barristers, forensic accountants
and investigators.
Our culture
We have a collaborative and inclusive
culture that underpins our decisions.
We are building inclusivity by:
− being a force for good in society,
acting globally and engaging locally;
− demonstrating commitment at the
highest level;
− establishing sustainable and socially
responsible business principles;
− making DWF a great place to work
and to do business.
See page 37 for more information
Our values
Always aim higher
By refusing to do only the minimum
and reaching further every time, we
expand the realm of what’s possible.
Be better together
By supporting each other and
working as a team we can achieve
more for our clients and ourselves.
Disrupt to progress
Just because there’s an established
way of doing things, it doesn’t mean
it’s the best way.
Keep all promises
A promise is a promise, no matter
how large or small. By keeping
promises, we build trust, loyalty
and commitment.
Attend to details
Paying attention to every last detail
is the right way to ensure clients
experience the very best of DWF.
See pages 12 and 37 for more
information
DWF Group plcAnnual report and financial statements 2020
Our divisions
Commercial Services
Revenue
Providing a range of Complex legal services and Managed Services
to a wide range of clients and sectors, our Commercial Services
division includes corporate, litigation and real estate practice groups.
These cover areas such as business restructuring, commercial and
competition, tax and private capital, employment, finance, pensions,
real estate, debt recovery, asset management, housing and planning.
Insurance Services
Providing a range of Complex legal services and Managed Services
predominantly to insurers and their clients. This division includes our
teams covering catastrophic personal injury, occupational health and
casualty, motor, fraud and resolution law, as well as our professional
indemnity and commercial insurance practice groups.
Connected Services
Providing our products and services that complement the legal
services offered by our other three divisions. Connected Services
has been built on our existing products and services, including our
costs business, our insurance claims handling business, and our
software and technology company, as well as other service lines,
such as loss adjusting.
International
Providing Complex legal services and Managed Services outside
of the UK and Ireland, our International division focuses on growth
in the same areas of legal services as our Commercial Services and
Insurance Services divisions, across territories that include Australia,
France, Germany, Italy, the Middle East, Poland and Spain.
Our international presence
We have offices in 31 locations across four continents, with
more than 4,200 people. We also work in association with six
other legal business around the world, in the USA, Argentina,
Panama, Colombia, Turkey and South Africa.
35%
32%
7%
26%
03
£104.4m
119 Partners
1,008 FTE
£95.8m
69 Partners
899 FTE
£20.2m
18 Partners
278 FTE
£76.8m
173 Partners
882 FTE
4,200+
people are employed across the Group
FTSE 100
We work with 25 of the FTSE 100
companies
10+ year
relationships with half of our clients
14%
of revenue comes from our top five clients
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 04
Chairman’s statement
Supporting our
people, delivering
for our clients
Jonathan Bloomer
Chairman
Dear shareholder,
I am delighted to welcome you to our Annual Report and equally
delighted to introduce myself as your new Chair. I have been
the Chairman of DWF Group for a little over five weeks and
so I want to begin by thanking my predecessor, and now Group
CEO, Sir Nigel Knowles, and our Deputy Chairman, Chris
Sullivan, for their contributions and support in helping me
prepare this statement.
I am very pleased to have taken on the role of Chairman of DWF.
It is a differentiated business in a highly competitive industry
that is on the verge of a period of significant change. The Group
is very well positioned to capitalise on this change, and I am
looking forward to working with the Board to implement the
strategy set out by Sir Nigel, aimed at taking DWF forward
to a new phase of sustainable and profitable growth.
Business and markets
Like all businesses in our sector and beyond, we face the
considerable challenge of navigating an unpredictable global
economy that will continue to be affected by COVID-19 for
the foreseeable future.
COVID-19 had a significant impact on our
business, but we have done a number of things
to ensure DWF has the strength and resilience
to perform throughout this financial year.
These include implementing a cost-savings programme that will
realise £15m of savings in this financial year, and an agreement
with lenders that provides access to a secondary revolving
credit facility (‘RCF’) of £15m, in addition to our existing RCF
of £80m, with a relaxation of certain covenants.
While we moved quickly to further strengthen liquidity and
increase operational efficiency, we have also seen performance
improve markedly since April, as our differentiated offering and
range of services remain in demand. Our strong relationships
with institutional clients in our key sectors have also ensured
that our cash collection has been healthy.
DWF Group plcAnnual report and financial statements 2020 05
Living our values
The culture within our business is underpinned by our five
core values. This year, more than ever, we have seen our
people living our values as they have responded to the
challenges presented by COVID-19. This has been clear in
the way our people have supported each other, our clients
and our communities.
This year we launched DWF Achievers, a recognition platform
that allows colleagues to congratulate each other for living to
our values. Since its launch earlier in year, there have been
more than 9,000 recognitions through the platform.
See pages 36 to 43 for more information.
Jonathan Bloomer
Chairman
7 September 2020
Our employees and culture
COVID-19 has also had a significant impact on our ways
of working. Throughout this period, our priority has been the
health and safety of our people. An outstanding response from
our IT and other central services teams ensured that more than
95% of our people were able to work from home during the
strictest lockdown periods. A significant proportion of our people
continue to work remotely, and we have put in place numerous
measures to support them in doing so, with a particular focus
on their physical and mental wellbeing.
We are now carefully implementing plans for
phased returns to offices, dependent on the
specific circumstances and governmental
guidance in our respective locations.
The importance DWF places upon culture has been impressed
upon me since my appointment. The Group has made further
progress this year to support partner and employee recognition,
improve and harmonise benefits, perform strongly in leading
Diversity & Inclusion (‘D&I’) rankings, and make a significant
community impact.
Strategy and capital allocation
Despite the disruption caused by the COVID-19 pandemic, we
made very good progress with our strategy in FY20. Among the
principal capital allocations the Group made, the acquisitions
of RCD and Mindcrest have helped develop further our
International and Managed Services businesses. We anticipate
reinvesting around half of the £15m of FY21 cost savings as we
continue targeted, strategic investments in our capabilities.
Dividend
Like many listed businesses, the impact of COVID-19 has
caused us to review our position on paying a full-year dividend.
This is a matter we have given great consideration to, as we
know the importance of a dividend, to both our external and
internal shareholders.
The proposal of a final dividend for FY20 underscores
our current confidence in FY21 trading and outlook. We are
seeing our approach to providing integrated legal services
through our Complex, Managed and Connected proposition
resonate with clients. This is driving an encouraging pipeline
of new work. At the same time, we continue to look for further
operating efficiencies to build upon the cost reductions we
announced in May and July and the office rationalisations
that are well underway.
ESG
The Board recognises that Environmental, Social and
Governance matters are of greater importance than ever before.
Your Board performed well in ensuring effective governance in
our business and you can read more detail on the activities and
priorities of our governance committees on pages 64 to 91.
We also strive to make a positive social and environmental
impact, most notably through our CSR activities and the work
of the DWF Foundation, which you can read about on pages 36
to 43.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 06
Group Chief Executive Officer’s report
A resilient
business model
Sir Nigel Knowles
Group Chief Executive Officer
The global legal industry is going through a period of significant
change as new delivery models and service providers emerge to
meet client demands for greater ease and efficiency. This trend
is only likely to accelerate, as the economic consequences of
COVID-19 force more in-house legal teams to challenge the
established ways of doing things.
I am honoured to have been asked to lead the Group
through this period of change, and am pleased to describe here
some of what we have done through the course of FY20 – and
beyond – to ensure DWF is well placed to capitalise on these
market opportunities.
Firstly though, I want to reiterate my thanks and pay tribute
to my predecessor as Chief Executive Officer, Andrew
Leaitherland. In May this year it was announced that Andrew
would be stepping down as Group CEO. Andrew spent more
than 20 years at DWF and was CEO for 14 years.
He was instrumental in the growth of DWF, both in the
development and expansion of the services the Group provides,
as well as its geographic spread. During his tenure, DWF grew
from two offices in the UK to a global business of more than
30 offices across four continents. He was also at the heart of
DWF’s successful IPO in March 2019. I wish Andrew well
with his future endeavours.
FY20 performance
Trading through the majority of FY20 was strong and the Group
made significant investments to support its growth objectives.
The sudden and far reaching impact of COVID-19 had a material
effect on the final quarter with a resulting impact on profitability.
Despite this, we delivered a solid performance with overall
revenue growth of 10.9% and organic growth of 2.0%.
While we achieved record Group revenue, with an organic
growth rate that compares to other global law firms in FY20,
it was lower than expected.
Our progress with our strategy
Our strategy is to provide integrated legal services globally
through our Complex, Managed and Connected delivery
models, which we can combine to deliver bespoke solutions
for our clients. This single integrated approach delivers greater
efficiency, price certainty and transparency for our clients
without compromising on quality and service.
Complex legal advisory services have always been a mainstay
of our business. Through our Commercial, Insurance and
International Services divisions, we provide clients with premium
legal advice and excellent client service. We have continued to
invest in strengthening our Complex legal advisory capabilities
through the year, including through the majority of our net 64
partner joiners. This includes the new partners who have joined
our business through acquisition.
DWF Group plcAnnual report and financial statements 2020 07
Managed Services provides alternative legal services,
often outsourced and process led services, which standardise,
systematise, scale and optimise legal workflows. We took
a significant step towards scaling our Managed Services offering
this year through the acquisition of Mindcrest. This significantly
extended our Managed Services capability, giving us a presence
in Pune, India, and access to an experienced and talented
team that has been operating Managed Services contracts
with corporate clients for more than 15 years. The addition
of Mindcrest to our existing Managed Services teams is
already resulting in new client opportunities.
While our Connected Services division, which provides
products and services that enhance our legal offerings, did not
grow as much as anticipated at 13.0%, this was affected by
underperformance in one Connected business that we have
since restructured. The other Connected business’ revenues
grew c.18.5% year-on-year. A number of Connected innovations
and client projects were also instrumental in DWF achieving its
highest ever position in the 2019 Financial Times Innovative
Lawyers report, being ranked the eighth most innovative law
firm in Europe. We also won two awards, including one for
our ground-breaking IPO. Our innovation credentials were
strengthened further this year with the acquisition of RCD
in Spain. RCD has also consistently ranked highly in the FT’s
report and was the first in its market to establish a specific
innovation department.
M&A is also a key factor in enabling us to achieve our strategy.
In FY20, we completed the acquisitions of RCD and Mindcrest,
and established our first office in Poland through the recruitment
of the Warsaw office of K&L Gates Jamka. We also opened an
office in Düsseldorf through a team hire from Marccus Partners
and, with further team hires, we strengthened our offering in
Australia. DWF has completed 17 acquisitions in the past 13
years, but with external market conditions and a desire to ensure
we have fully integrated our most recent additions, there is
a temporary pause on M&A. It will still be a key ingredient in
driving further growth, and we anticipate resuming activity
when conditions allow.
Our people
Our culture is defined by our five core values: Always aim
higher; Be better together; Disrupt to progress; Keep all
promises; and Attend to details. These values have long been
integral to the success of our business and emphasise our focus
on our people, our clients and our communities, but this year we
launched two key engagement initiatives to further establish
them across the business.
We launched The Rubie Awards, our annual awards programme,
through which people can nominate colleagues for recognition
in one of ten different categories. We also launched DWF
Achievers as a day-to-day recognition platform, through which
people recognise each other for living our values. I also want to
recognise here the resilience and commitment of our people,
and thank everybody for living our values in recent months.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 08
Group Chief Executive Officer’s report continued
COVID-19 has required all of us to make significant adjustments
to our daily working lives, in many cases juggling other personal
responsibilities and commitments. We have seen countless
examples of the ways colleagues have been supporting each
other through challenging circumstances, and continuing to
provide the same excellent service to our clients.
We conduct two global Pulse Surveys each year, helping us
assess the views of our people on their career and experiences
at DWF. The most recent of these surveys completed shortly
following my appointment as CEO in FY21, but it seems
appropriate to reveal the findings here, to illustrate our
progression. We were pleased with a sizeable increase in the
proportion of people completing the survey, rising from 60%
to 67%, while our overall Engagement Score – a composite
figure based on three key questions in the survey – edged
up from 75 to 76.
Our people are central to the Group’s CSR activities, dedicating
their time and expertise through programmes such as our
social mobility initiative, 5 STAR Futures, and contributing to
and coordinating fundraising to support the charitable giving
of the DWF Foundation. This has again been evident throughout
COVID-19, with a range of fundraising and community activities
to support, for example, the manufacture of PPE equipment and
donations to food banks.
We participate in the Business in the Community’s Responsible
Business Tracker, to help us assess our performance as
a responsible business. Our overall score of 60% confirms that
we are leading our benchmarking group, compared to a legal
sector average of 51%, and that we scored higher than the
average score of 43%, from all 94 cross-sector companies who
took part.
Our clients
We have continued to strengthen our client relationships this
year through the provision of services to new and existing
clients. In FY20, we were successful in being appointed or
reappointed to 28 legal panels, including appointments from
Severn Trent and Dixons Carphone. DWF was also appointed
as a Strategic Legal Partner to BT, to provide real estate and
insurance services through a five-year Managed Services
contract. We were subsequently also added to BT’s
significantly reduced external legal panel. We have also
supported our clients in a number of important litigation
mandates, which included the successful defence of WM
Morrison in a landmark case at the Supreme Court.
This year, we launched a new internal Key Client programme
to ensure we are providing even greater resources and focus
to our most significant clients. This programme is in its first year,
but we have already seen 21% year-on-year billings increase
from our ‘grow’ and ‘target’ clients.
At the end of our last financial year, we launched our largest
ever client-listening project, conducting a review of more than
400 client contacts. The purpose of this project is to give us
comprehensive client feedback, enabling us to invest further
in areas where clients derive most value, and to identify any
areas to improve.
FY21 strategy
Following my appointment as CEO on 29 May, I reaffirmed
our commitment to our strategy, which is fundamentally
the right one. There will be no sharp changes of direction
from DWF, but there will be much greater focus this year
on operational improvement. The aim is to improve
efficiency across the Group, better connectivity across our
global business, and to see the improvements in working
capital performance that we believe will help us to reduce
net debt. Key priorities, some of which are already
complete, include:
− a strategic review of our business, resulting in the closure
of offices in Brussels and Singapore, and a reduction
of our presence in Cologne and Dubai
− a review of the Group’s costs, resulting in the
identification of a further £5m of cost savings in FY21, in
addition to £10m of savings already implemented before
my appointment
− a project to significantly improve our lock up performance
(the time it takes to convert work in progress and debtors
into cash) with progress already being made, as lock up
has fallen from 206 days at 30 April to 200 days at 31 July
− a greater focus on the integration of recent acquisitions,
to improve business opportunities and synergies
− growing our Managed Services offering.
DWF Group plcAnnual report and financial statements 2020 09
Outlook and current trading
In our trading update issued in July, we said we were cautiously
optimistic that FY21 will benefit from the actions we have taken
to reshape costs, combined with the client opportunities we
continue to see. The environment remains uncertain, but we have
large parts of our business which are annuity and some which are
counter-cyclical in nature and we expect to see some increased
activity as a result. The first four months of trading have shown
a steady recovery in activity levels since the dip in activity in Q4 of
FY20, and more importantly, this has translated into a significantly
improved net profit position. This is despite the cost savings we
have executed having a time lag such that they are not yet all
reflected in the FY21 year-to-date profit contribution. As we look
forward, we expect to benefit from a full year revenue and profit
contribution from our acquisitions, RCD and Mindcrest. The Group
will also benefit from the partner and team hire activity made
towards the end of FY20, as these contribute organic revenue
and profits. The further impact of the cost saving measures and
savings from discontinued loss making operations will underpin
near term profitability, in line with the Group’s target of delivering
profitable, cash backed growth. The discontinued and reduced
operations represented c.1.5% of Group revenues and generated
a £4.5m EBITDA loss in FY20. The Group’s cost saving
programmes are expected to reduce the FY20 cost base by
£15m, although approximately 50% of this may be reinvested
into the business in key growth sectors. The proposal of a final
dividend for FY20 underscores our current confidence in FY21
trading and outlook.
We are seeing our approach to providing integrated legal
services through our Complex, Managed and Connected
proposition resonate with clients. This is driving an encouraging
pipeline of new work. At the same time, we continue to look for
further operating efficiencies to build upon the cost reductions
we announced in May and July and the office rationalisations
that are well underway.
In the first quarter, we have seen a significant uptick in bid
activity which has resulted in numerous client wins, including
a new contract to handle casualty and motor injury claims in
Scotland and Northern Ireland with multinational insurance
company, Aviva.
Sir Nigel Knowles
Group Chief Executive Officer
7 September 2020
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 10
Our market drivers
Underpinned
by strong
market drivers
Client consolidation
of suppliers
Clients are looking to consolidate their
supply chains and reduce the number
of professional services providers.
This will help them better manage the
budgets of their legal function, and
bring efficiencies in procurement and
supplier review processes. In April,
BT reduced its legal panel from around
40 to 15 firms, with DWF a newly-
appointed panel member.
Market overview
The legal services industry continues to evolve rapidly,
with the challenges presented by COVID-19 only likely to
accelerate a number of the key drivers of change. Even before
the COVID-19 pandemic, eight in ten of the UK’s largest law
firms said that making better use of technology was their key
priority for the next two to three years. With remote working
moving from a short-term need to a longer-term shift in
ways of working, and with companies seeking productivity
improvements and greater efficiency from their legal
functions, this will move from priority to necessity.
What this means
for our industry
Legal services providers will need
to be able to offer a broader range
of integrated and related services,
and demonstrate a sector-led
understanding of clients’ challenges.
COVID-19 will be an accelerator,
as clients come under significant
pressure to manage budgets at
a time when demand for advice may
be increasing, as we typically see
more disputes during a downturn.
Our opportunity
Our differentiated business model
and sector expertise gives us an
opportunity to win a greater share of
the market, by deepening relationships
with existing clients and winning
new appointments.
Our response
We have continued to invest in
strengthening our services and
extending our global reach, enabling
us to offer more of the services
our clients need, where they need
them. Our strengths in litigation and
insurance, two business areas typically
in demand through a downturn, mean
we are well-placed to capitalise on
this opportunity.
DWF Group plcAnnual report and financial statements 2020 11
Alternative to the
traditional law-firm model
Technology as
a strategic enabler
Law-firm
consolidation
In recent years, we have seen an influx
of new entrants to the legal services
market with providers challenging the
long-standing model offered by law
firms. This is a result of in-house
counsel looking for more cost-effective
solutions and standardised processes,
especially for work that doesn’t need
to be done by trained lawyers.
The traditional model will come under
ever-greater pressure, especially for
the provision of certain services, and
firms will need to adapt to continue
competing. COVID-19 will again act as
an accelerator due to the pressure on
legal function budgets, and we expect
to see greater use of alternative legal
service providers (‘ALSPs’) by clients
as they look to do more for less.
Our ability to provide complex advisory
services while addressing clients’
demands for managed services more
efficiently, in addition to our Connected
Services offering, gives us an
opportunity to provide an attractive
alternative to the traditional model.
We have continued to invest in our
differentiated model, launching new
connected services and acquiring
Mindcrest to strengthen our Managed
Services platform. DWF Mindcrest
has been awarded a Band 1 ranking
in the Chambers ALSP Guide. We have
demonstrated our sector knowledge
through our thought-leadership
programme, including our
COVID-19 hub.
The legal services sector is increasingly
complex, as a broad range of providers
with differing business models
compete and collaborate. This has
resulted in a period of innovation with
far greater adoption of technology to
address clients’ challenges. This will
continue, but we will also see an
increasing number of legal services
providers turn this trend inwards, as
COVID-19 causes firms to assess how
technology can enable new ways
of working.
Legal services providers will need
to continue investing in technology
to support service to clients, but also
to ensure their people can work
effectively and efficiently in a flexible
way. DWF has long had a culture of
agile working, with an enabling
technology platform. It is clear that
legal services can be offered through
agile working, and this will
fundamentally disrupt the legal market.
To work collaboratively with clients,
using our sector-knowledge and
investment in technology to find the
right solutions. To embrace new ways
of working as a permanent feature
of our business model, with potential
material benefits in the amount of
space we require, the flexible working
options available to our people, and
benefits to our sustainability agenda
through reduced consumption of power
and paper, and less travel required.
We are committed to ‘Doing things
Differently’ and have invested in
technology throughout our Complex,
Managed and Connected platforms.
We moved quickly to enable agile
working for more than 95% of our
people, and we will apply the best
practices developed during this period
to support permanent shifts in how,
where and when our people work.
Recent years have seen consolidation
within the legal services market, with
a number of significant mergers or
acquisitions at a national and cross-
border level. This trend will continue as
firms seek to benefit from greater
scale and operational efficiencies,
especially in markets such as Australia
and Canada, which have experienced
less consolidation so far.
The sector remains highly fragmented
in comparison to other elements of the
professional services industry. With the
other drivers outlined here providing
opportunities for those with global scale
and a greater breadth of expertise,
consolidation will continue and longer
term could accelerate. COVID-19 will
have a limiting impact in the short term
as businesses seek to conserve cash,
but we may continue to see some
tactical and strategic opportunities,
including distressed situations.
We have enjoyed very strong
benefits from our acquisition strategy.
While M&A activity is on hold in the
current environment, we will continue
to identify opportunities to grow our
business organically and inorganically.
This will focus on, but not be limited
to, further consolidation opportunities
in our international operations and
continued building of our Managed
and Connected Services capabilities.
In the past financial year, we acquired
RCD in Spain and Mindcrest. We also
launched in Poland and expanded
in Germany and Australia through
large-team recruitment. While
COVID-19 will mean a slower period
of acquisitive activity, we expect to
continue once market conditions return
to normal.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 12
Our business model
Our business model
Creating shareholder returns,
investment in the business
and incentivising our people
Driven by our purpose and values
Impacted by
Our purpose
To transform legal services, through our
people, for our clients. That’s why we are
transforming our own business, bringing
technological innovations, outstanding sector
specialists and our advanced working practices
together in an entirely new business model.
Our values
Always aim higher
By refusing to do only the minimum and reaching further
every time, we expand the realm of what’s possible.
Be better together
By supporting each other and working as a team, we can
achieve more for our clients and ourselves.
Disrupt to progress
Just because there’s an established way of doing things,
it doesn’t mean it’s the best way.
Keep all promises
A promise is a promise, no matter how large or small.
By keeping promises, we build trust, loyalty and commitment.
Attend to details
Paying attention to every last detail is the right way to ensure
clients experience the very best of DWF.
Market drivers
Our differentiated business model
leaves us well placed to capitalise on the
key trends driving change in our industry.
Client consolidation of suppliers
Alternative to traditional law firm model
Technology
Law firm consolidation
See pages 10 and 11 for more information
Our stakeholders
Understanding and responding to their
issues through effective engagement.
See pages 14 to 17 for more information
DWF Group plcAnnual report and financial statements 2020 13
How we create and add value
Outcomes
Revenue growth
+10.9%
Underlying organic revenue growth
+2.0%
Revenue per partner
-9.0%
Cost to income ratio
42.6%
Hours volunteered
12,500 hrs
People employed
4,200+
Our main activities
Predictable, recurring and diverse revenue
streams – a significant proportion of our
revenues are recurring, and earned through
our main activities:
1. Commercial Services
Corporate services, litigation and real estate practice groups.
2. Insurance Services
Insurance law and professional indemnity, and commercial
insurance practice groups.
3. International
The same areas of legal services as our Commercial
Services and Insurance Services divisions, but outside
of the UK and Ireland.
4. Connected Services
Professional and technology services complementary
to those offered by our other three divisions.
Outputs
Maximising value through our differentiated strategy:
Understanding our clients
We create value for our clients by providing solutions that
meet their business requirements, across multiple jurisdictions
and linked service offerings. This allows them to consolidate
and secure their supply chain, and gain the efficiencies that
come with consolidation. Our professionals offer sector-
specific expertise, which enables solutions more closely
tailored to client needs.
Engaging our people
As a people business, engagement, employee welfare,
values and diversity are at the heart of what we do.
Our differentiated proposition, global reach and enviable
client list offers amazing opportunities to grow and develop.
Our values and social conscience are also part of our DNA,
and through the DWF Foundation, an independent registered
charity, we contribute to many worthy causes in the
communities where we operate.
Doing things differently
We are not afraid to disrupt the legal services sector, or what
we offer, and this willingness to innovate ultimately brings
more efficient solutions for our clients, and helps us grow
as a business. Doing things differently also creates internal
efficiencies by freeing up capacity to do more complex legal
work, spend more time with our clients, or progress further
through innovation.
See pages 18 to 25 for more information
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 14
Our stakeholders
Listening and
responding to our
stakeholders
As a professional services business, the
relationships we build and sustain are at the
heart of our success.
Through the course of this year, we have invested significant
time and resources in a programme of activities that enables
us to gather input and hear feedback from a broad range
of internal and external stakeholders. We have redoubled
or adapted these activities to ensure they continue
through COVID-19.
Section 172
The Directors have had regard to the matters set out
in section 172(1)(a)-(f) of the Companies Act 2006 when
performing their duties under section 172. They consider
they have acted in good faith, in the way that would be
most likely to promote the success of the Company for the
benefit of its members as a whole, while also considering
the broad range of stakeholders who interact with, and
are affected by, our business.
See pages 16 to 17 for more information on how we engage
with our stakeholders. For an example of how the Directors
have had regard to matters set out in section 172 when making
decisions please see page 15. For more details on the Board
and its Committees’ activities see page 61 together with this
Strategic Report.
Details of how environment and reputation have been dealt with
can be found in the Responsible Business section on pages 37
to 43.
The Directors act fairly as between members of the
Company and the Company always seeks to ensure
that its communications are transparent. Page 63 of the
Corporate Governance report details how we engage with
our shareholders.
DWF Group plcAnnual report and financial statements 2020 15
Section 172 in action – Board Approval
of DWF’s acquisition of RCD
Last December, DWF announced it had acquired the
Spanish legal business RCD, with offices in Madrid,
Barcelona and Valencia, and with more than 400 people.
The acquisition was a key strategic development this year.
Before Board approval of this acquisition, the Directors
considered the interests of all stakeholder groups –
particularly our people, clients, shareholders and
regulators. Notably, the acquisition met a key commitment
made to IPO investors, with Spain one of several markets
highlighted in our prospectus as being of interest.
Brexit uncertainty was a factor behind extensive regulatory
engagement to ensure we established an ownership
model that would satisfy regulators in the event of
a ‘no-deal’ exit. The Board also considered the beneficial
impact the acquisition would have on our people and
clients, as a major contributory factor in the continued
growth of the business and extension of our services.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 16
Our stakeholders continued
Why we engage
How we engage
Key interests
Outcome of engagement
Pulse Surveys to track engagement on
a range of issues, a monthly Employee
Forum, annual and day-to-day recognition
programmes, and other regular
communication – including CEO updates
through the early phase of COVID-19,
and Board members responsible for
representing the interests of employees
and partners.
A long-standing Client Care programme led
by Relationship Managers, supported this
year by a bespoke Client Census to discover
satisfaction metrics and key themes
of feedback. A special COVID-19 hub
to help clients with current challenges.
Strategy, pay and reward, recognition, Diversity & Inclusion,
Improvements in our Pulse Survey engagement score –
ways of working, and our response to COVID-19.
which is now at 76, an increase from 75 and 67 respectively
in our two previous surveys.
The development of new services and areas of expertise,
A record of retaining existing clients and winning new
expansion of our offering globally, development of our
business – including recent wins with Dixons Carphone and
Managed and Connected offerings, impact of COVID-19.
Severn Trent. We were appointed, or reappointed, to 28 legal
panels this year.
We engage to build effective and trusted
relationships, and to ensure suppliers are
providing value for money, performing to
our standards and conducting business
to our expectations.
Through a fair and consistent RFP process,
regular review meetings with key suppliers,
and ongoing feedback to maintain
openness and to improve value from
supplier relationships.
RFP process, due-diligence requirements, governance
Strong supplier relationships and the development
expectations, payment processes and terms, impact
of processes such as a standardised RFP, Supplier Code
of COVID-19.
of Conduct and Ethical Sourcing Questionnaire to improve
overall consistency.
A series of events throughout the financial
year, including our AGM, half-year and
full-year results presentation and roadshow,
and annual Capital Markets Day.
Management also attend relevant
conferences, and meet with investors and
potential investors through the year.
Representatives from each bank attend our
full-year and half-year results presentations
and our Capital Markets Day. We also have
regular discussions with our banks about
our strategic priorities and our response
to COVID-19.
We focus activities on the themes of
education, employability, health and wellbeing,
and homelessness. Examples of activity
include the 5 STAR Futures programme, and
our people’s fundraising in support of the
charitable giving of the DWF Foundation.
Quarterly meetings with our SRA
Regulatory Manager and regular meetings
with other regulators, annual reporting to
SRA on strategy, risk management and
regulatory compliance, attendance at
SRA-led Compliance Forum.
Participation in consultations, attendance
and participation at conferences and
business network events, membership of
relevant industry bodies, creation of relevant
thought leadership.
The addressable market and our strategy to win a greater
Strong and constructive relationships with key institutional
share, the building of International, Managed and Connected,
investors, with issues they raise addressed in our
the underlying drivers in Commercial and Insurance, progress
presentations through the year and at our Capital Markets
in reducing debtor and WIP days and reducing net debt, our
Day – which in January focused on two key areas of interest
response to COVID-19.
for investors: Managed and International.
Response to COVID-19, initiatives to improve lock up days,
Strong and supportive relationships which resulted in
capital allocation strategy, risk appetite and approach to
a positive response, ensuring the Group was able to
leverage and the provision of ancillary products over and
strengthen its liquidity position to deal with COVID-19.
above the RCF to support the Group’s growth ambitions.
How to access funding via the DWF Foundation and support
£322,906.60 raised for the DWF Foundation in FY20.
through our wider CSR programme.
12,500 hours volunteered.
1,060 young people supported in developing their skills.
57 charities supported in FY20.
Ranked 16 in the Social Mobility Index.
Professional standards and compliance, training programme,
Constructive relationships and an open dialogue, critical for
innovation and data-driven disruption, impact of COVID-19.
DWF as the only legal business listed on the Main Market.
Monthly regulatory updates provided to the Board.
Regulatory change in the sector, innovation in the provision
Opportunity to shape policy consultations and development,
of legal services, response to COVID-19, and the broader
positive client relationships with governmental bodies.
impact on different sectors.
Our people
(employees
and partners)
It is vital we recruit, retain and develop the
best people – only by doing this will we be
able to fulfil our purpose.
Clients
Suppliers
Shareholders
Debt providers
Our communities
Clients are at the heart of everything we do,
and so it is important we understand how
we need to evolve to provide them with the
right support.
Our shareholders play an important role
in monitoring and safeguarding the
governance of our Group. Some are also
employees and partner owners, who have
a critical role to play in the continued
success of our business.
Access to working capital is the lifeblood of
any business, especially now as companies
need to ensure they have sufficient liquidity
to navigate the challenges presented by
COVID-19. It is essential we have strong
relationships with our banking providers
and that they are clear about our strategy.
It is the right thing to do, but there is also
a clear expectation of this among many
of our other stakeholders – including our
people, clients and shareholders.
The Solicitors
Regulation
Authority and
other regulators
Policymakers
We engage with the Solicitors Regulation
Authority (‘SRA’) and other international
bodies to maintain the constructive
and trusted relationships vital to any
regulated entity.
We work with national and local
Governments, policymakers, regulators
and trade bodies to ensure we can help
shape policy.
DWF Group plcAnnual report and financial statements 2020 17
Why we engage
How we engage
Key interests
Outcome of engagement
It is vital we recruit, retain and develop the
Pulse Surveys to track engagement on
best people – only by doing this will we be
a range of issues, a monthly Employee
Strategy, pay and reward, recognition, Diversity & Inclusion,
ways of working, and our response to COVID-19.
able to fulfil our purpose.
Improvements in our Pulse Survey engagement score –
which is now at 76, an increase from 75 and 67 respectively
in our two previous surveys.
Clients are at the heart of everything we do,
A long-standing Client Care programme led
and so it is important we understand how
by Relationship Managers, supported this
we need to evolve to provide them with the
year by a bespoke Client Census to discover
The development of new services and areas of expertise,
expansion of our offering globally, development of our
Managed and Connected offerings, impact of COVID-19.
A record of retaining existing clients and winning new
business – including recent wins with Dixons Carphone and
Severn Trent. We were appointed, or reappointed, to 28 legal
panels this year.
RFP process, due-diligence requirements, governance
expectations, payment processes and terms, impact
of COVID-19.
Strong supplier relationships and the development
of processes such as a standardised RFP, Supplier Code
of Conduct and Ethical Sourcing Questionnaire to improve
overall consistency.
The addressable market and our strategy to win a greater
share, the building of International, Managed and Connected,
the underlying drivers in Commercial and Insurance, progress
in reducing debtor and WIP days and reducing net debt, our
response to COVID-19.
Strong and constructive relationships with key institutional
investors, with issues they raise addressed in our
presentations through the year and at our Capital Markets
Day – which in January focused on two key areas of interest
for investors: Managed and International.
Response to COVID-19, initiatives to improve lock up days,
capital allocation strategy, risk appetite and approach to
leverage and the provision of ancillary products over and
above the RCF to support the Group’s growth ambitions.
Strong and supportive relationships which resulted in
a positive response, ensuring the Group was able to
strengthen its liquidity position to deal with COVID-19.
How to access funding via the DWF Foundation and support
through our wider CSR programme.
We engage with the Solicitors Regulation
Quarterly meetings with our SRA
Authority (‘SRA’) and other international
Regulatory Manager and regular meetings
Professional standards and compliance, training programme,
innovation and data-driven disruption, impact of COVID-19.
£322,906.60 raised for the DWF Foundation in FY20.
12,500 hours volunteered.
1,060 young people supported in developing their skills.
57 charities supported in FY20.
Ranked 16 in the Social Mobility Index.
Constructive relationships and an open dialogue, critical for
DWF as the only legal business listed on the Main Market.
Monthly regulatory updates provided to the Board.
Regulatory change in the sector, innovation in the provision
of legal services, response to COVID-19, and the broader
impact on different sectors.
Opportunity to shape policy consultations and development,
positive client relationships with governmental bodies.
Our people
(employees
and partners)
Clients
Suppliers
Shareholders
Debt providers
Our communities
The Solicitors
Regulation
Authority and
other regulators
Policymakers
Forum, annual and day-to-day recognition
programmes, and other regular
communication – including CEO updates
through the early phase of COVID-19,
and Board members responsible for
representing the interests of employees
and partners.
right support.
satisfaction metrics and key themes
of feedback. A special COVID-19 hub
to help clients with current challenges.
We engage to build effective and trusted
Through a fair and consistent RFP process,
relationships, and to ensure suppliers are
regular review meetings with key suppliers,
providing value for money, performing to
and ongoing feedback to maintain
our standards and conducting business
openness and to improve value from
to our expectations.
supplier relationships.
Our shareholders play an important role
A series of events throughout the financial
in monitoring and safeguarding the
year, including our AGM, half-year and
governance of our Group. Some are also
full-year results presentation and roadshow,
employees and partner owners, who have
and annual Capital Markets Day.
a critical role to play in the continued
Management also attend relevant
success of our business.
conferences, and meet with investors and
potential investors through the year.
Access to working capital is the lifeblood of
Representatives from each bank attend our
any business, especially now as companies
full-year and half-year results presentations
need to ensure they have sufficient liquidity
and our Capital Markets Day. We also have
to navigate the challenges presented by
regular discussions with our banks about
COVID-19. It is essential we have strong
our strategic priorities and our response
relationships with our banking providers
to COVID-19.
and that they are clear about our strategy.
It is the right thing to do, but there is also
We focus activities on the themes of
a clear expectation of this among many
education, employability, health and wellbeing,
of our other stakeholders – including our
and homelessness. Examples of activity
people, clients and shareholders.
include the 5 STAR Futures programme, and
our people’s fundraising in support of the
charitable giving of the DWF Foundation.
bodies to maintain the constructive
and trusted relationships vital to any
regulated entity.
We work with national and local
Governments, policymakers, regulators
and trade bodies to ensure we can help
shape policy.
with other regulators, annual reporting to
SRA on strategy, risk management and
regulatory compliance, attendance at
SRA-led Compliance Forum.
Participation in consultations, attendance
and participation at conferences and
business network events, membership of
relevant industry bodies, creation of relevant
thought leadership.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 18
Strategy at a glance
A clear strategy
for growth
Organic growth – three principal strategic objectives
Objective
Performance
Priorities
Measures
Understanding our clients
We have continued to strengthen our client relationships
this year by providing high-quality services to new and
existing clients, and with the launch of our major new Client
Listening project.
To deepen these relationships by supporting existing clients in
− Net Promoter Score with Key Clients: 50
more locations, and extending them through our Complex,
Managed and Connected platforms – and by using this
− Panel appointments and reappointments: 28
differentiated offering to win new clients.
− % of clients supported in more than one country: 56%
Engaging our people
A significant year with a range of new initiatives successfully
launched, including our recognition programmes, The Rubie
Awards and DWF Achievers. We have also introduced a new
global benefits platform and established our twice-yearly
Pulse survey.
Taking an inclusive approach to help us attract diverse talent that
− Engagement score: 76
better reflects the society we work in. Our current challenge and
future opportunity, due to COVID-19, is to create a concrete plan
− Number of DWF Achievers recognitions: 9,091
to ensure we can continue to attract and sustain a pipeline
− Number of people promoted: 214
of talent.
Doing things differently
We have continued to invest in our differentiated offering, for
example through the acquisitions of RCD and Mindcrest, and
continued development of our Connected businesses. This
investment is supporting our clients in making better use of
technology, improving productivity, and making their legal
functions more efficient.
To further grow our Managed offering, including identifying
− FT Innovative Lawyer ranking – 8
and moving certain existing services from our Commercial
and Insurance divisions into Managed Services.
Inorganic growth – disciplined acquisition strategy
Objective
Performance
Priorities
Measures
Acquisitions
In FY20, we opened an office in Warsaw, Poland and completed
the acquisition of RCD in Spain to add a presence in these
key European economies. We also acquired Mindcrest to
significantly enhance our Managed Services capabilities.
After a significant period of M&A activity, our priority in FY21
− Earnings enhancing
will be to ensure we have integrated all recently acquired
businesses properly. We have paused new M&A activity
− Accretive to all KPIs
temporarily, but it remains an important part of our strategy.
See pages 26 and 27 for more information
− % of clients with a 10-year+ relationship 50%
See pages 20 and 21 for more information
− Strong performance in leading D&I rankings: Stonewall (30th);
Social Mobility Index (16th), Top Employers for Working
Families (Top 10); Top 50 Employer for Women
See pages 22 and 23 or more information
− Connected Services revenue growth – +13%
− DWF Ventures R&D investment – £700k
− Mindcrest acquisition annual cost savings of £2.9m by FY22
See pages 24 and 25 for more information
DWF Group plcAnnual report and financial statements 2020 19
Organic growth – three principal strategic objectives
Objective
Performance
Priorities
Measures
Understanding our clients
We have continued to strengthen our client relationships
this year by providing high-quality services to new and
existing clients, and with the launch of our major new Client
Listening project.
To deepen these relationships by supporting existing clients in
more locations, and extending them through our Complex,
Managed and Connected platforms – and by using this
differentiated offering to win new clients.
Engaging our people
A significant year with a range of new initiatives successfully
launched, including our recognition programmes, The Rubie
Awards and DWF Achievers. We have also introduced a new
global benefits platform and established our twice-yearly
Pulse survey.
Taking an inclusive approach to help us attract diverse talent that
better reflects the society we work in. Our current challenge and
future opportunity, due to COVID-19, is to create a concrete plan
to ensure we can continue to attract and sustain a pipeline
of talent.
− Net Promoter Score with Key Clients: 50
− Panel appointments and reappointments: 28
− % of clients supported in more than one country: 56%
− % of clients with a 10-year+ relationship 50%
See pages 20 and 21 for more information
− Engagement score: 76
− Number of DWF Achievers recognitions: 9,091
− Number of people promoted: 214
− Strong performance in leading D&I rankings: Stonewall (30th);
Social Mobility Index (16th), Top Employers for Working
Families (Top 10); Top 50 Employer for Women
See pages 22 and 23 or more information
Doing things differently
We have continued to invest in our differentiated offering, for
example through the acquisitions of RCD and Mindcrest, and
continued development of our Connected businesses. This
investment is supporting our clients in making better use of
technology, improving productivity, and making their legal
functions more efficient.
To further grow our Managed offering, including identifying
and moving certain existing services from our Commercial
and Insurance divisions into Managed Services.
− FT Innovative Lawyer ranking – 8
− Connected Services revenue growth – +13%
− DWF Ventures R&D investment – £700k
− Mindcrest acquisition annual cost savings of £2.9m by FY22
See pages 24 and 25 for more information
Inorganic growth – disciplined acquisition strategy
Objective
Performance
Priorities
Acquisitions
In FY20, we opened an office in Warsaw, Poland and completed
the acquisition of RCD in Spain to add a presence in these
key European economies. We also acquired Mindcrest to
significantly enhance our Managed Services capabilities.
After a significant period of M&A activity, our priority in FY21
will be to ensure we have integrated all recently acquired
businesses properly. We have paused new M&A activity
temporarily, but it remains an important part of our strategy.
Measures
− Earnings enhancing
− Accretive to all KPIs
See pages 26 and 27 for more information
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 20
Strategy in action
g
n
i
d
n
a
t
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r
e
d
n
U
s
t
n
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i
l
c
r
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o
DWF Group plcAnnual report and financial statements 2020
Our landmark strategic
partnership with BT started in
November 2019. It illustrates our
progress in offering Managed
Services and technology-led
Connected Services – helping
global operators achieve
efficiency benefits.
21
BT is one of DWF’s largest wins this financial
year and a major success for our Managed
Services business. Demonstrating our
capabilities through this partnership was also
a contributory factor in our appointment to
BT’s significantly reduced external legal panel.
We will now provide a full range of Complex,
Managed and Connected Services to the global
communications services company.
The opportunity
To become the chosen partner for outsourced Managed,
legal and Connected Services, and to demonstrate our ability
to become a provider of external advisory services.
The innovation
We will use our delivery model to identify opportunities to bring
further efficiencies to BT’s internal and external legal services,
including the opportunity to collaborate with BT as a strategic
partner in providing insurance and real estate legal services to
its in-house legal team, alongside being a provider of external
legal services.
The value created
The contract win validates DWF’s approach to ‘Understanding
our Clients’, by providing a full-service offering that combines
Complex advisory capabilities with volume-driven and
technology-enabled legal solutions, complemented by
value added services from our connected division.
Five-year Managed Services deal
10,000 Transfer of c.10,000 claims
26 Number of firms DWF beat to win competitive pitch
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 22
Strategy in action
r
u
o
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n
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E
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o
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DWF Group plcAnnual report and financial statements 2020
Our people have told us one
of the things they love at DWF
is being recognised for a job
done well, and also having the
opportunity to celebrate the
successes of colleagues. This year
we introduced two initiatives to
help us recognise the dedication,
commitment and quality
of our people.
23
The Rubie Awards is our annual awards
programme, where people can nominate
colleagues for recognition in 10 different
categories. DWF Achievers is our day-to-day
recognition platform, where people can
congratulate each other for living our values.
The opportunity
To ensure we recognise our people properly, and to give
colleagues the chance to share in each other’s success.
The innovation
Both initiatives improve engagement and interaction.
Colleagues can nominate each other for The Rubie Awards
and they vote for the winner of one of the awards. People can
‘boost’ Achievers’ submissions by donating points to those
recognised, for them to use to buy rewards.
The value created
The value shows in the popularity of the initiatives – for
example, we’ve had more than 9,000 recognitions made
through DWF Achievers.
430 nominations for The Rubie Awards
80% Proportion of colleagues using DWF Achievers
1,200 Average number of recognitions per month
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 24
Strategy in action
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g
n
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D
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r
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i
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DWF Group plcAnnual report and financial statements 2020
Our approach to ‘Doing things
differently’ is about adding value
to clients beyond simply providing
legal services. We collaborated
with a globally recognised
football club client, so that teams
of university students could help
them develop a solution for a real-
time legal challenge.
25
This unique collaboration was led by DWF
Ventures, our research and development
arm that specialises in horizon scanning and
developing new ways to work. The foresight
from the DWF Ventures team allows us to create
value for clients by ‘doing things differently’.
The opportunity
The football club’s legal team needed a way to prioritise and
manage the wide range and fast flow of legal work arriving
from different parts of the business. We created a programme
through which University of Manchester students could help
find a solution, with our role being to facilitate the experience for
the benefit of the students and the client. We wanted students
to see how the legal services industry is changing, while helping
our client solve an operational problem quickly and effectively.
The innovation
Work placements in legal services are nothing new, but they
usually focus on conventional law. It’s rare for a programme
to focus on a real-life operational problem, and to run in such
a structured and experiential way. This innovation helped
students, DWF and the football club collaborate in a way
that worked for all parties.
The value created
Our client welcomed the solution the students found. It used
a three-part process, with an internal client-engagement tracker,
a formula to assess and prioritise work, and a form to record
data for analysis. The football club was impressed with the
result and speed of the work. The innovative approach taken
has resulted in a long-term relationship with the client, and
generated value a traditional model could not achieve.
50+ Over 50 student participants
10 days Design sprint completed in 10 working days
3 student teams presented to the client legal team
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 26
Strategy in action
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n
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t
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q
c
A
DWF Group plcAnnual report and financial statements 2020 Our strategy of both organic
and acquisitive growth has
already brought demonstrable
financial and client benefits.
We have successfully completed
and integrated 17 acquisitions
in the past 13 years. The
strategic acquisition of Rousaud
Costas Duran (‘RCD’) was
DWF’s largest to date, and
it has significantly grown our
international capabilities.
27
Established in 2003 with the aim of bringing
innovation to the legal industry in Spain,
RCD established itself as one of the country’s
fastest-growing full-service law firms. Our
combined sector alignment and our shared
focus on innovation has the potential for future
natural synergies, and helps fulfil our purpose
of transforming legal services.
The opportunity
We highlighted Spain as a key market of interest in our IPO
prospectus. This acquisition presented an opportunity to fulfil
that promise and establish a presence in a major European
market. RCD offers a strong capability and culture overlap, and
has relationships in the Iberian peninsula and Latin America.
The move is consistent with our strategy of acquiring
complementary businesses with high levels of recurring
revenue and strong cash generation.
The innovation
A leading firm in Spain, RCD is renowned for innovation and
entrepreneurship, having been consistently ranked by the
FT among Europe’s most innovative law firms. Our shared
values, ambition and entrepreneurial vision allow us to present
a differentiated and competitive offering to our clients.
DWF-RCD’s ability to work globally also helps us better meet
clients’ needs and grow our business.
The value created
RCD has seen rapid growth in just 16 years, from 10 professionals
in 2003 to over 400 in 2019, and the success of DWF-RCD
represents another positive stage of our international expansion
ambitions and a continuation of achieving our IPO priorities.
Our diversified business model continues to demonstrate its
benefits, with opportunities to build further market share.
Growth in international operations
Locations
Employees worldwide
31
4,200
27
3,200
2019
2020
2019
2020
400+ DWF-RCD employees
20+ practices
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 28
Key performance indicators
Measuring
our progress
At a Group level, we have several key financial
and operational measures which we use to
assess our performance. The Board monitors
various KPIs on a regular basis, to ensure that
our strategic objectives are being achieved.
To ensure our management’s focus is aligned
with our shareholders, our KPIs are reflected
in their remuneration through our management
incentive schemes.
See page 78 of the Directors’ Remuneration Report for more detail.
Alternative performance measures are used
throughout this document.
This section of the Annual Report and Accounts
defines each measure and, where necessary,
provides a reference to the reconciliation to the
nearest statutory measure.
Revenue growth
Definition: The change in net revenue achieved year-on-year
Performance:
+10.9%
+15.2%
Underlying organic revenue growth
Definition: Net revenue of any business unit that has been in
the Group for at least 12 months, always excluding the first
12 months of any business unit that was acquired.
Performance:
+2.0%
+12.5%
Gross profit margin
Definition: Gross profit divided by net revenue
Performance:
47.9%
53.5%
Cost to income ratio
Definition: see note 2 of the financial statements
Performance:
42.6%
42.7%
DWF Group plcAnnual report and financial statements 2020 29
Underlying adjusted EBITDA
Gross lock-up days, debtor days and WIP days
Definition: see note 2 of the financial statements
Definition: see note 29c of the financial statements
Performance:
£21.8m
£27.8m
Underlying adjusted PBT
Definition: see note 2 of the financial statements
Performance:
£13.8m
£20.3m
Adjusted EPS
Definition: see note 8 of the financial statements
Performance:
3.0p
7.2p
Net partner joiners
Definition: The difference between the aggregate of lateral
hires, partners engaged from acquisitions & promotions and
those partners that have ceased to be engaged by the Group
Performance:
64
20
Revenue per partner
Definition: Net revenue divided by the total number of partners
in the Group
Performance:
£784.3k
£855.7k
Performance:
(125 debtor days and 81 WIP days)
206 gross
lock-up days
203 gross
lock-up days
(122 debtor days and 81 WIP days)
Free cash flow
Definition: see note 29b of the financial statements
Performance:
(£7.2m)
(£18.1m)
Net debt
Definition: The aggregate of cash and cash equivalents
and other interest-bearing loans and borrowings
(excluding lease liabilities)
Performance:
£64.9m
£35.3m
Employee engagement score
Definition: The aggregate score taken from three key
engagement questions in our internal Pulse Survey
Performance:
76
751
1. Previous Survey
FY2019/20
FY2018/19
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 30
Financial review
Strong performance
While revenues have grown, reported gross profit declined
by 0.8% on the previous year, due to a 24.3% increase in
direct costs from acquisitions, and investments in additional
partners and fee earners. That said, some of the reduction
comes from the revised remuneration model implemented at
IPO. The increase in underlying gross profit of 3.8% indicates
what growth would have been had the revised compensation
model always been in place. Underlying adjusted administrative
expenses increased in line with revenues, with most of this
increase relating to acquisitions, professional indemnity
insurance and an increase in provision for doubtful debt.
The cost to income ratio improved by 0.1 ppt to 42.6% in FY20.
The shock impact of COVID-19, combined with growth in direct
and administrative costs, resulted in an underlying adjusted
EBITDA figure of £21.8m, a 21.6% reduction on the previous
year. Underlying adjusted PBT is £13.8m, a 32.4% decrease
on FY19. Reported Profit Before Tax (PBT) is £18.2m, a 39.6%
increase on prior year, with the increase largely due to the gain
on bargain purchase for Poland, RCD and Mindcrest. This gain
being the difference between the element of the purchase
price treated as consideration and the fair value of the assets
acquired. This gain is treated as a non-underlying item as it
is not recurring.
As announced in April and May, we have effected a series
of cost-cutting initiatives, with a combined impact of £15m
in the year, to ensure the business operates with an improved
level of efficiency.
Working capital
Working capital (measured using ‘gross lock-up days’) has
remained a key area of focus, and closing net debt was £64.9m
at the year end. Although this was above management’s
expectations (prior to the impact of COVID-19), strong April
collections helped to mitigate the level of increase.
Gross lock-up days comprise two elements: Work-in-progress
(‘WIP days’), representing the amount of time between performing
work and invoicing clients; and debtor days, representing the
length of time between invoicing and cash collection.
The Group is pleased by its performance for WIP days, which
remained flat year over year at 81 days and improved by 15 days
since the half year in October 2019. This is a result of the
divisions working to bill earlier, combined with billing-process
improvements, which are beginning to reflect in performance.
The Group’s debtor days increased by 4 days as a result of two
issues: Firstly, a delay in February billing due to some teething
issues in upgrading the practice management system; and
secondly, slower collections activity in Q4, which was mainly
the result of COVID-19 related interruptions. The billing delay
was a one-off issue that has since been resolved, but had
a knock-on effect on the timing of collections. FY21 collections
are encouraging, as countries come out of COVID-19-related
lockdown, but the Board acknowledges this may be tempered
if the situation in any location reverses.
A challenging end
to the year
Chris Stefani
Chief Financial Officer
Financial overview
The Board recognises that the financial performance for the
year ended 30 April 2020 (‘FY20’) was severely affected by
COVID-19 in Q4, at a point in the year when the significant
investments made since IPO were expected to support revenue
growth. Despite these headwinds, revenues have grown
by 10.9%, albeit with some short-term dilution to gross and
net margins as a result of the shortfall in Q4 revenues,
impacting profitability.
International and Connected Services continue to be the
‘growth engines’ of the business, with International growing
53.2%, helped by the acquisitions of K&L Gates in Poland and
RCD in Spain. Connected Services grew by 13.0%, with good
performances across the majority of the businesses, albeit
overall growth was held back by underperformance in one
practice group, which has since been restructured.
In addition to the COVID-19 disruption, a number of entities in
these two divisions underperformed during the year, and we
announced the decision to close Singapore and Brussels, and
slim down Dubai and Cologne, on 9 July 2020. These changes
will have a significant positive impact in FY21 and beyond, by
eliminating losses and reducing cash consumption. In the FY20
accounts, we have only treated Cologne as a discontinued
business as the decisions regarding the other locations were
made after the year end.
DWF Group plcAnnual report and financial statements 2020 31
The Group continues to focus on efficient lock-up management,
and believes there is a significant opportunity to reduce lock-up
days. Previously published targets signposted a five-to-ten-day
reduction in the medium term. Internally, we have set more
demanding targets for FY21 in the expectation that we can
achieve a higher reduction. While Q4 turbulence delayed
some operational initiatives, the Group is now re-focussing
on standardising the global process for billing and collections,
billing automation, and partner accountability, to improve
working-capital performance.
Any improvement in lock-up days will have a knock-on effect
on net debt, with each day of lock-up reduction affecting cash
favourably, by over £1m.
The Group has an £80m RCF facility and during the height of the
COVID-19 pandemic secured an additional £15m contingency
facility as a precaution against any further unexpected impacts
from the pandemic. There are also a number of ancillary working
capital facilities available for use. The Group does not expect to
use the contingency facility based on current forecasts, expects
to continue to operate within its banking covenants, and has
seen strong free cash flow generation over the course of Q1
of FY21 as trading normalises after the COVID-19 impacts seen
in Q4 of FY20.
Revenue
Revenue (excluding discontinued operations) was £297.2m
for the year, compared to £268.1m in FY19, an increase
of 10.9%. Three out of four divisions grew, with Insurance
growing 5.2% and Connected Services growing 13.0%, all
organic. International grew by 53.2%, boosted by acquisitions.
The organic growth in International was 11.1%, as strong results
in locations such as Australia and France were diluted by weaker
performances in Dubai, Singapore, Germany and Brussels.
We have since closed or scaled back these territories as part
of the cost-rationalisation measures mentioned above. Similarly,
Connected Services’ growth was diluted by some challenges
in the DWF 3Sixty software business, which we have now
restructured. Commercial Services, however, felt the deepest
impact from COVID-19 due to a drop in transactional activity,
contracting by 4.1% compared to FY19.
Direct costs
Direct costs, including partner remuneration, were £155.0m
compared to £124.7m in the previous year, an increase of
24.3%. This increase was due to investment in 160 additional
fee earners and 20 partners on an organic basis, and the
addition of 44 partners and fee earners through M&A.
Gross profit
Gross profit decreased marginally, by 0.8%, compared to
the previous year, at £142.2m (FY19: £143.4m). This reflects
a decrease in gross profit margin of 5.6ppts. While Insurance
maintained underlying gross margin at FY20 levels (FY20: 48.1%),
the other three divisions all saw margins dilute due to the
impact of COVID-19 on Q4 activity levels and the previously
mentioned underperforming entities we have now restructured.
We expect the level of margin dilution reflected in the FY20
figures will reverse during FY21, and have seen this in trading
performance since the year end. Managed Services also remains
an opportunity, with cost savings signposted on the acquisition
of Mindcrest expected to provide further support for a recovery
in gross margin.
Divisional performance
Commercial Services
Commercial Services had a challenging year, with the first half
performance of its transactional teams in Corporate Services
and Real Estate affected by uncertainties around the timing of
Brexit and the general election. The second half was expected
to be stronger in those areas, and there were some signs of
a recovery in Q3.
However, the effect of COVID-19 on the division in Q4 was
material – more than on any other division. A combination of
larger client projects being put on hold, lower levels of corporate
transactional activity generally and WIP write-offs resulted in
lower than normal productivity and consequently a severe, albeit
short term, reduction in revenue. Even Litigation, which had
performed strongly for the majority of the year, was not
unaffected with courts closing and a moratorium being placed
on certain court proceedings. Overall, the division ended the
financial year having contracted by 4% and with an underlying
gross margin decline of 11% (underlying gross margin
percentage decline of 3.4ppts).
Given the speed with which COVID-19 impacted, and the
proximity to the Group’s April year end, it was not possible to take
sufficient mitigating actions to protect underlying gross margin for
FY20. Indeed, as well as retaining capacity on the expectation
of a post-election recovery towards the end of Q3 and into Q4,
the division had made a number of lateral hires during the year,
several of whom arrived during Q4. The new data protection team
was launched and other partner lateral hires joined in Q4 in the
corporate, commercial, banking and restructuring teams.
These investments had a dilutive effect on the FY20 underlying
gross margin, exacerbating the COVID-19 impact, but are
expected to contribute to more profitable revenues in FY21.
For example, the data protection team has already gained
a strong market profile, with a number of new wins and panel
appointments secured which are helping to drive H1 performance.
In addition, actions have now been taken to remove excess
capacity across the division whilst the medium term impact of
COVID-19 on the division can be better understood. Q1 of FY21
has seen a recovery in activity levels – not to pre-COVID levels,
but to a level which, along with the cost savings being
implemented, is expected to lead to a recovery in the gross
margin contribution of the division.
As we move into Q2 of FY21, client demand for the teams in
Litigation remains strong, with recent significant wins in both
‘complex’ and ‘volume’ work. In particular, the commercial,
finance and regulatory litigation teams are demonstrating
strong levels of activity and growth. Although, activity levels in
Corporate Services have picked up since the end of FY20, the
outlook for Corporate Services and also Real Estate remains
cautious given the ongoing impact of the pandemic. Each of
Corporate Services, Litigation and Real Estate remains focused
on developing opportunities with Managed Services and
Connected Services. In particular, Managed Services, including
the new Mindcrest business, have been working closely
with both Litigation and Real Estate on several client projects.
Corporate Services has also been working closely with
Connected Services to develop products that allow the
smooth and more efficient completion of transactions remotely
throughout the pandemic. These initiatives, together with the
current levels of activity and the implemented cost savings,
are delivering improved gross margin.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 32
Financial review continued
Insurance Services
The Group’s Insurance Services business delivered revenue
growth of 6% for the year, despite the COVID-related impact
of the lockdown. The sudden transition to home working and
the added challenge for many of childcare and home schooling
resulted in a significant reduction in activity levels. This,
combined with a slowdown in instructions in the important end
of year month impacted on revenue growth for the year, and
diluted previous gains in profitability with FY20 delivering a
broadly flat underlying gross margin at 48%. Insurers are seeing
a changing frequency of claims and mix, with some move away
from Motor, General Liability and some transportation sector
work and this will continue to be impacted by COVID-19, but we
are seeing already increased exposure to other insurance sector
legal work. The Group believes prospects for this division remain
resilient given the annuity type nature of these services and the
counter-cyclical nature of litigation services.
In particular, there has been strong growth in Vueity (50%),
Adjusting (141%) and Forensic (187%) albeit these are all
businesses which were in build mode in the prior year.
Advocacy grew by 19% but was impacted by the disruption to
the court system from COVID-19 at the end of the financial year.
The Claims business, which accounts for just over a third of
revenue in the Division, has shown modest growth of 5%.
A business restructuring was undertaken towards the end of the
financial year which provides a strong platform for continued
growth in revenue and profitability in all territories (UK, Australia,
Canada, France, Ireland, Italy and USA) in the coming year,
particularly as insurers see the volume of COVID-19 related
business interruption claims increase. Performance in USA
and Italy in FY20 was particularly strong with growth of 153%
and 15% respectively driven by team expansion. The newly
launched Regulatory Consulting business finished the year
with a well-developed pipeline which bodes well for FY21.
The Professional Indemnity and Commercial, and CAT PI &
Occupational Health practice groups both delivered revenue
growth in the year, with PI in particular performing strongly as
a result of recent partner hires and related client wins. Motor,
Fraud, RL & IHT was flat in year as expected as the legal and
insurance industries geared up for the implementation of the
so-called whiplash reforms (now further postponed).
The underlying gross margin development of the Connected
businesses was delayed by the disruption from COVID-19
preventing what would likely have been a small year on year
improvement. However, a number of cost saving and
restructuring measures have been effected in order to support
positive margin development in FY21 as the businesses
continue to mature, growing revenues on a controlled cost base.
The Insurance division has long-term, annuity relationships with
some of the largest Insurers in the UK and this is demonstrated
by our being retained by two of our biggest clients to advise
them in connection with the FCA proceedings for a declaration
on various policy wordings relating to business interruption
claims arising from COVID-19. It is a privilege to be the trusted
advisor in one of the most important cases for many insurers
for centuries, joining an exclusive circle of legal advisers for
the insurance industry which includes magic circle and silver
circle firms.
International
The International division grew by 53% in FY20, delivering
revenues of £76.2m compared to £49.7m in the previous year.
Poland and Spain contributed the majority of this growth, with
both acquisitions performing well. Underlying organic growth
was 5%, with some relatively flat performances across the rest
of the International locations and contraction in a small number
of locations with Dubai being the most material drag on growth,
contracting by 38%. Australia was a standout in terms of
growth, with revenues of £16.4m being 43% ahead of prior year.
The Group expects demand for Insurance services to remain
strong in particular in relation to COVID-19 related claims.
In addition to the business interruption claims being handled
by the commercial insurance team, the first COVID-19 fatal and
injury claims have been received from the care and food sectors
with the expectation of substantial numbers of claims to follow.
The potential for fraudulent claims is huge and the division’s
award winning Fraud team is ideally placed to advise and assist
with those claims. There is a pipeline of targeted partner hires
in addition to recent partner joiners which will support continued
profitable growth in the division. The ongoing recruitment of
a team in Southampton is also expected to contribute to
revenues in FY21.
Connected Services
The Group’s Connected Services division delivered revenue
growth of 13.0% for the year compared to 23.3% in the prior
year. FY20 growth was less than targeted, predominantly driven
by lower demand for services within the DWF360 software
development business, which saw a number of large projects
either cancelled or put on hold, and the impact of COVID-19
towards the end of the financial year. Excluding this, the other
businesses delivered combined growth of c.18.5% year-on-year,
in line with expectations.
Awareness of Connected Services capabilities has continued
to develop in the financial year with businesses becoming more
established and mature and delivering improving performances.
Performance across a number of locations was impacted by
COVID-19 in the final quarter, with previously forecast revenues
falling away as transactions stalled and instructions slowed.
Given the investment in partner headcount in FY19 and H1 of
FY20, some of the locational performances were nevertheless
disappointing and a number of cost saving measures were
triggered at the half year to right-size the cost base and tackle
areas of underperformance. The benefit from these savings
takes some time to be realised due to notice periods being
served, but are expected to be delivered early in FY21.
In addition, since year-end, the decision has been taken to cease
operations in Singapore and Brussels and slim-down operations
in Dubai and Cologne. This will save costs without having
a material impact on revenues.
The underlying gross margin percentage for the division fell
by 2.8pts to 40.7% as a result of the COVID-19 revenue impact,
the underperformance of certain locations, and the level of
investment carried into Q4 in the direct cost line. The cost saving
measures that have been implemented are expected to deliver
a stronger margin in FY21.
Whilst some operations have been closed or slimmed down,
the International division remains a key growth opportunity for
the Group. In Germany, Düsseldorf will become our regional
centre now that Cologne has been substantially slimmed down.
In Australia, real estate hires in Sydney and Melbourne, and
employment and commercial teams in Melbourne, have hit the
DWF Group plcAnnual report and financial statements 2020 33
ground running despite the challenges of COVID-19. Elsewhere,
selective investments in partner hires in Poland, Italy and Paris
will help to drive further organic growth. As highlighted at the
time of IPO, we will continue our international expansion in
priority countries through either future associations or additional
acquisitions in legal markets which we would like to enter with
the USA, Canada, Hong Kong and the Netherlands all being
locations where we will continue to look for opportunities.
The timing of any future M&A will be determined by ongoing
FY21 performance as the impact of the pandemic
becomes clearer.
Administrative expenses
Reported administrative expenses have reduced compared to
the previous year, moving from £128.3m in FY19 to £120.1m in
FY20. However, this movement is skewed by three factors: the
impact of acquisitions, non-underlying items and share-based
payment expenses:
− The accounting for acquisitions creates a gain on bargain
purchase due to the difference between the fair value of the
assets acquired and the element of the purchase price treated
as consideration
− Acquisitions have also impacted non-underlying items by
£2.9m due to the fact that there are elements of the purchase
price paid for RCD and Mindcrest that link to continuing
employment obligations. They are therefore treated as
remuneration rather than consideration and are non-underlying
as they cease after the end of the lock-in period during which
there is an ongoing employment obligation
− The majority of the remaining non-underlying items are the
transaction costs related to Poland, Mindcrest, RCD and the
costs of an aborted acquisition due to COVID-19
− Share based payment charges have increased as a result
of a full year of the vesting of IPO related share awards and
an element of the acquisition purchase price for RCD being
accounted for as employment linked expense settled in the
form of shares
On an adjusted basis, administrative expenses increased by
£8.6m, or 7.5%, which mainly related to additional premises
costs, an increase in PI insurance costs, and an increase in the
doubtful-debt provision due to COVID-19. This increase is a result
of an increase in the aged debtor balance which triggers a higher
expected future loss. The table below breaks out the split of the
reported numbers:
Net revenue
Administrative expenses
Amortisation of intangible
assets – acquired
Impairment
Gain on bargaining purchase
Non-underlying expenses
Share-based payment expenses
Impact of transition to IFRS 16
Adjusted administrative expenses
Cost to income ratio
2020
£’000
Represented
2019
£’000
297,231
120,084
268,136
128,264
(1,510)
(382)
25,084
(7,632)
(12,570)
3,492
126,566
42.6%
–
–
–
(12,569)
(1,202)
–
114,493
42.7%
On an adjusted basis, the cost-to-income ratio has reduced
from 42.7% in the previous year to 42.6% in FY20, reflecting
good control of costs despite revenue dropping away sharply
in Q4. There are, nevertheless, opportunities for savings, which
we are looking in to and executing in H1 of FY21, and there
are substantial COVID-19-related savings from reduced travel,
reduced office consumables and reduced business development
expenditure. Opportunities to learn from the flexible working
enforced by COVID-19, and the impact this has on the need
for office space for the Group, may offer future savings.
Net finance expense
Net finance expenses were £1.9m in FY20, compared to £2.1m
in FY19, a decrease of 10.6%, a result of better structuring of
the Group’s borrowing arrangements. FY20 now includes
interest payable on leases (disclosed separately from net finance
expenses in the income statement) of £2.0m, reflective of the
accounting changes arising following the transition to IFRS 16.
Profit before tax
Reported PBT was £18.2m, compared to £13.0m in FY19, an
increase of 39.6%. The reported PBT is affected by the same
items that skew administrative expenses (acquisition related gains
and expense, share-based payments and non-underlying charges).
Underlying adjusted PBT is stated before the impact of these
items together with the impact of the change to IFRS16 and the
revised compensation model. Underlying adjusted PBT of £13.8m
in FY20 compares to £20.3m in FY19. The year-on-year reduction
of £6.6m, or 32.4%, is due to the aforementioned factors affecting
gross margin dropping through to bottom-line profit, as the
COVID-19 revenue impact came too late in the year to be able to
mitigate with cost savings. As described above, we have acted on
direct costs and administrative expenses to help improve margins.
Taxation
The overall tax charge for the year is £3.6m, which represents an
effective tax rate of 19.9%.
The reported profit before tax includes net non-underlying
credits of £15.6m, which largely consist of gains on bargain
purchases offset by acquisition-related expenses. These items
have been treated as non-taxable and non-deductible
respectively, resulting in a reduction in the effective tax rate.
These were offset by other non-deductible items relating to
Australian members’ remuneration treated locally as dividends,
share-based payment charges relating to the consideration
shares issued for the acquisition of RCD, amortisation of
intangible assets arising on consolidation and other disallowable
trading expenditure to reduce the overall tax charge by £1.4m.
Tax losses generated in a nil-tax jurisdiction and tax charges
incurred in higher tax jurisdictions such as Spain (£0.9m), and
tax losses in entities where the recognition criteria for
associated tax assets have not been met (£0.7m), have
increased the overall tax charge.
The acquisitions of law firms in Poland, Spain and Australia,
as well as the acquisition of the Mindcrest business, have given
rise to deferred tax liabilities of £8.8m as at 30 April 2020 in
respect of intangible assets recognised on consolidation.
These deferred tax liabilities are increased by short-term timing
differences in Australia (£0.2m) and offset by deferred tax assets
recognised in respect of tax depreciation timing differences
(£0.8m), estimated tax deductions for share-based payments
(£1.8m) and tax losses in Australian and the UK (£0.5m) to
give a net deferred tax liability at 30 April 2020 of £5.9m.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 34
Financial review continued
Adjustments in respect of prior periods of £0.1m relate to minor
differences in the final corporate tax returns compared to the
amounts provided for in the prior period accounts.
The Group’s current tax expense of £6.1m mainly relates to
its entities in the UK (£4.7m) and Spain (£1.3m). In line with the
payment profile of tax liabilities in these territories payments
of £3.6m have been made in the year ended 30 April 2020,
of which £0.5m was in respect of the prior period current
tax expense.
With the exception of an open transfer pricing enquiry in India
relating to a pre-acquisition period of the Mindcrest business, for
which the Group has adequate indemnification from the sellers,
there are no open tax audits or investigations across the group.
In line with group’s tax strategy, it is not considered that any
aggressive or materially uncertain tax positions have been
adopted by any of the group entities. As such, the level of
tax risk faced by the group is considered to be low.
Dividend
The Group’s dividend policy is to retain sufficient capital to fund
ongoing operating requirements, and to invest in the Group’s
long-term growth. The previously stated dividend strategy for
the Group was, from FY20, to target a dividend-pay-out ratio
of up to 70% of DWF Group plc’s profit after tax. Given the
stronger-than-expected recovery in Q1 of FY21, the Board
will increase the pay-out ratio to c.90% for FY20, to allow
a final FY20 dividend of 0.75 pence per share. This underscores
the Board’s confidence in the improving financial outlook, and
the commitment of the Group to deliver compelling shareholder
returns while also achieving the Group’s growth strategy.
This final dividend is subject to approval at the AGM on
21 October 2020 and, if approved, will be paid on
5 November 2020.
Balance sheet
Group net assets increased to £69.2m in FY20 compared to
£41.8m in 2019. The increase is due to:
− an increase in gross lock-up (work in progress, trade & other
receivables and disbursements) of £35.2m (23.2%), which
has grown due to acquisitions, net revenue growth and an
increase in lock up days;
− a £19.6m increase in prepayments from the accounting
treatment of part of the purchase price of the Group’s
acquisitions, as remuneration is expensed to the income
statement over the lock-in period of five years
post completion.
There has also, however, been an increase in liabilities:
− £29.6m increase in net debt
− £7.2m increase in deferred consideration
− £5.7m opening net assets impact of the transition to IFRS 16,
principally due to the recognition of a £70.3m right-of-use
asset and a £78.1m lease liability, both replacing the £10.5m
operating lease incentive liability.
Capital expenditure (‘capex’)
The Group’s operating structure is not capital intensive, and
FY20 was no exception. Expenditure in the period was primarily
focused on IT infrastructure and replenishment, and building the
Managed Services platform. The investment in the Managed
Services platform increased overall capex by £2.0m from £5.4m
in FY19 to £7.4m in FY20.
Conclusion
The Group expected to achieve profitable growth in the
year, from a combination of organic performance and
M&A contribution. While some units saw a degree of
underperformance, the adverse impact of COVID-19 was the
material factor in the lower-than-expected revenues, which
dropped away sharply on lockdown, and left a shortfall in profit
contribution due to the short amount of time the Group had to
react to a very dynamic environment. Cost-saving initiatives are
currently underway to secure target savings of £15m in FY21
and £18.5m from FY22 and, in addition, we have closed or
slimmed down a number of underperforming units to protect
margins and cash.
COVID-19 came after a period of heavy investment, with the
majority of the 64 additional partner joiners brought into the
business in the year hired by the end of Q3 (pre-COVID) and
£16.7m of cash outflows committed to M&A, in the expectation
that a strong Q4 would see the business de-leverage quickly.
While Q4 working capital performance was stronger than
expected, it fell short of a normal year end, leading to a higher
leverage position than anticipated before the impact of
COVID-19. We expect that the cost-saving measures and
working-capital drive will help reduce the leverage and improve
the net-margin positions seen in the FY20 accounts, and current
trading to end of August FY21 reflects both this de-leveraging
effect and materially improved profitability. We are managing,
and will continue to manage, working capital and net debt
tightly, and this represents an opportunity to reduce borrowings
in the medium term.
The acquisitions in Poland, RCD in Spain, and Mindcrest, reflect
important strategic steps for the Group and we expect them
to make a significant contribution to performance in FY21
and beyond. We will continue to consider carefully organic
and, at the appropriate point, inorganic growth opportunities.
We expect profitable growth in FY21 as we return to more
normal trading conditions, albeit the Board remains cautious
given the uncertain economic environment.
Chris Stefani
Chief Financial Officer
7 September 2020
DWF Group plcAnnual report and financial statements 2020 Responsible business at a glance
A year of
achievement
35
Recognising the
achievements of our
people
We launched The Rubie Awards,
an annual awards programme to
celebrate our people’s success. In our
first year, 430 people were nominated
for an award by colleagues.
A leading employer
for D&I…
We are one of only nine businesses
in the UK to achieve a Gold Standard
performance in the ENEI’s
TIDE benchmark.
…with leadership
committed to change.
We have Executive Board sponsors
for each strand of our diversity
programme: Gender; LGBT+; Race
& Ethnicity; Disability; Age; Flexible
Working, and Mental Health.
Working to improve
social mobility…
In the past year, we improved our
ranking in the Social Mobility Index
from 60th to 16th.
…by helping young
people to develop the
skills they need.
Our 5 STAR Futures programme is
designed to enable young people to
make the most of their potential – we
help to equip them with the business
skills, confidence and resilience to
aim higher and achieve more.
We commit to paying
a Living Wage
We are a UK Living Wage employer
and this year, we extended our
commitment to include our
apprentices from 1 May 2020.
And driving engagement
in our values
We also launched DWF Achievers,
our day-to-day recognition platform
which allows people to recognise
their colleagues for living one
of our core values.
Sector-leading
performance
We scored 60% in the Business
in the Community Responsible
Business Tracker, leading our
benchmarking group.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 36
Sustainability report
Integrating
sustainability
into our business
Our role in society
Our values continue to guide and inform what we do, and
we remain focused on operating sustainably. Through our activities,
and as a signatory of the United Nations Global Compact, we strive
to conduct our business in a manner that supports universal human
rights and is environmentally and socially responsible.
We are a global business, and our ambition is to make DWF
a world leader at responsible business, mobilising our collective
strength as a force for good in society to:
− create a skilled and inclusive workforce today, and for the future
− help build and sustain thriving communities where we live
and work
− play our part in repairing and sustaining our planet.
Our responsible strategy
We are putting sustainability at the heart of what we do.
Our responsible business strategy aligns with the UN Global
Compact’s universally accepted business principles and we
prioritise what we do to contribute to the UN Sustainable
Development Goals (‘SDG’s’).
We remain a member of Business in the Community (‘BITC’),
the largest business-led membership organisation in the UK
dedicated to responsible business. We use their Responsible
Business Tracker to measure and evaluate our performance.
In addition, BITC’s Responsible Business Map guides what we
do globally to address those issues most pressing in society,
and where we can make the most meaningful impact.
Sustainability governance
DWF’s CSR Team, led by our Director of CSR & Engagement,
works with the business to implement our CSR efforts globally.
This leadership group is chaired by our CEO, and provides updates
to the Executive Board and a report annually to the Board.
Priorities for the year ahead
Our participation in BITC’s Responsible Business Tracker
has provided us with an assessment of our performance as
a responsible business, by tracking our progress against the
Responsible Business Map, built on the UN’s Global Goals.
The results show our approach to responsible business
before the disruption of COVID-19.
Our overall score (60%) confirms we are leading our
benchmarking group (legal sector average is 51%) and
that we also scored higher than the average score of all
94 cross-sector companies who took part (43%). The overall
score is a composite of each element of the Responsible
Business Map. These are Leadership at Every Level;
Purposeful Leaders; Healthy Environment; and
Healthy Communities.
Our priorities are to:
− map the full range of issues affecting our business
the most, and where we can make the biggest impact
− review our risk register and widen our stakeholder
engagement around the world
− move beyond simple discussion, alongside year-on-year
reductions in emissions, to establish climate-related
considerations across our whole business.
Through this assessment cycle, we identified health,
wellbeing and Inclusion as material issues to focus on,
and we will sustain that focus in a post-COVID-19 world.
DWF Group plcAnnual report and financial statements 2020 37
Our approach to SDGs
In 2015, the 193 Member States of the
United Nations adopted the UN SDGs in
a bid to end poverty, protect the planet
and ensure prosperity for all by 2030.
Our responsible business strategy and measurement
through BITC’s Responsible Business Tracker, touches most,
if not all of the SDGs. Having mapped the goals to our
business operations, we are now in the decade where we
need to achieve them, and recognise that for all businesses,
there is still time to be at the forefront of change.
Responsible business –
supporting our people
Our values and culture
Our values define who we are and what we stand for. They are
what we believe, and influence how we behave. That is why
it is so important to apply these values to everything we do.
− Always aim higher
− Be better together
− Disrupt to progress
− Keep all promises
− Attend to details
Created, signed and upheld by our people, our values help us to
define and reinforce our culture. They are used as a benchmark
and enable us to recruit, retain and develop the highest quality
people who are experts in their fields.
Diversity and inclusion
We have a collaborative and inclusive culture that underpins our
decisions. Our Diversity & Inclusion (‘D&I’) and Dignity at Work
policies make it clear that the Group takes a zero-tolerance
approach to discrimination, bullying and harassment.
Our Diversity & Inclusion Leadership Group defines and
executes our global inclusion strategy. Executive Sponsors and
more than 40 senior leaders, supported by our Affinity Networks
and network of Diversity Champions, manage plans that support
gender, race, LGBT+, age, disability, agile-and-flexible working
and mental health.
Each Divisional CEO and Practice Group Head is responsible and
accountable for progressing a group-specific D&I plan to address
the gender and BAME targets set by the Board. All our Practice
Group Heads are held accountable for their gender balance
targets and plans. The Head of the D&I Leadership Group
provide updates to the Executive Board quarterly and mandatory
progress updates to the Board twice a year.
Benchmarking
Diversity & Inclusion benchmarking results:
− The Times Top 50 Employer for Women.
− Stonewall: We are a Top 100 employer for Stonewall on
LGBT+ inclusion, improved our ranking from 59th to 30th this
year. We were also recognised as Bi-Inclusive Employer of the
Year 2020.
− Working Families: Top 10 Employer for Working Families in 2019
and 2020.
− Employers Network for Equality & Inclusion (‘ENEI’):
We are one of only nine businesses in the UK to achieve
a Gold Standard performance in the ENEI’s TIDE benchmark
(Talent Inclusion & Diversity Evaluation).
− Disability Confident: We were the first legal business to be
awarded and maintain Disability Confident Leadership status
for removing barriers to disabled talent in the workplace.
− Social Mobility Index: In 2019, we improved our ranking
in the Social Mobility Index from 60th to 16th.
− International Women’s Day:
Our campaign in 2019 ranked as ‘Best Practice’ by
International Women’s Day organisation.
Maintaining our position as a UK Living Wage employer enables
us to effect positive change in society today and specifically
enhance the lives of people in the communities where we are
based. We extended our Living Wage commitment to include our
apprentices from 1 May 2020. We use International Women’s Day
(a week-long campaign at DWF), National Apprenticeship Week,
Mental Health Awareness Week, our own annual Global Diversity
Week & International Men’s Day activity as key inclusion
campaigns throughout the year.
LGBT UN Global Standards
We strive for all our colleagues to have access to equal
opportunity and respect, wherever they work. Alongside some
of the world’s largest businesses, DWF has made a global
commitment in support of the UN Standards which aim to tackle
discriminatory practices in the workplace, the marketplace and
in the community.
Race and ethnicity
During the year ended 30 April 2020, we have advanced
our support of the Race at Work Charter which has helped
our business change the recruitment and progression
of BAME talent.
Executive Board sponsors
Creating visible leadership and advocacy on diversity – members
of our Executive Board have signed-up to become Executive
Sponsors of particular diversity strands (see page 56 for further
details on the Executive Board sponsors).
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 38
Sustainability report continued
Race & Ethnicity Network
Our Race & Ethnicity Executive Sponsors are not just figureheads
– their role is to engage with colleagues, understand the issues
that need tackling and then support what needs to be done.
Since their appointment in February 2019, our Executive Sponsors
for Race & Ethnicity have engaged with colleagues across our
offices to strengthen and grow our Race & Ethnicity Network.
Race Reverse Mentoring
Together with our Network, the Executive Sponsors identified
that our senior leaders wanted to deepen their insight into how
colleagues who identified as BAME feel about their workplace,
and to better understand what they can do to create the right
conditions for inclusion to be meaningful. Each Executive Board
member committed to at least one face-to-face meeting with
their reverse mentor from the Network. 100% of the
relationships have been maintained.
Total headcount, broken down by division, between
full-time and part-time employees, gender, and diversity
Gender by division: gender
Division
Central Services
Commercial Services
Connected Services
Insurance Services
International
Mindcrest
Grand total
Female
70.4%
54.1%
48.5%
57.3%
51.5%
57.1%
57.8%
Male
Grand total
29.6% 100.0%
45.9% 100.0%
51.5% 100.0%
42.7% 100.0%
48.5% 100.0%
42.9% 100.0%
42.2% 100.0%
Full time/part time by division: full time flag
Division
Full time
Part time
Grand total
Central Services
Commercial Services
Connected Services
Insurance Services
International
Mindcrest
Grand total
79.6%
88.2%
86.6%
87.2%
86.7%
96.6%
86.4%
20.4% 100.0%
11.8% 100.0%
13.4% 100.0%
12.8% 100.0%
13.3% 100.0%
3.4%
100.0%
13.6% 100.0%
Diversity by division: ethnicity grouping
Division
BAME Non BAME
Unknown
Grand total
Central Services
Commercial
Services
Connected
Services
Insurance
Services
International
Mindcrest
Grand total
6.6%
8.7%
47.7%
46.9%
45.8% 100.0%
44.4% 100.0%
2.4%
34.0%
63.6% 100.0%
6.4%
33.9%
59.6% 100.0%
0.8%
82.9%
12.4%
4.7%
0.0%
94.5% 100.0%
17.1% 100.0%
29.3%
58.3% 100.0%
Gender pay gap
We recognise that reducing our gender pay gap requires
a sustained effort at every level of our business, and at every
point in the employee life cycle, from attraction and recruitment
through to development, succession planning and promotion.
Our sustained focus on this will result in a more-diverse
workforce, supported and empowered by our inclusive culture
and values.
Following the publication of our 2018 Gender Pay Gap report,
we introduced non-negotiable guiding principles on pay, concerning
fairness, transparency, consistency and competitiveness.
These four principles enable us to be clear and consistent in
our approach to pay, ensuring we are rewarding people fairly.
In 2019, the reduction in our combined mean gender pay gap
for a second consecutive year was a positive indication that
our efforts are having an effect. However, the slight increase in
our median pay gap is a powerful reminder that the pay gap is
largely the result of having more men at senior levels in higher
paid roles, and a higher proportion of women to men in roles
that fall within our lower pay-quartiles.
Engaging our workforce
We define engagement as the extent people commit to
something or someone in our business, and how hard they
work or how long they stay, as a result of that commitment.
Engaging People Executive
Our Engaging People Executive (‘EPE’) is responsible for furthering
our ambition to make DWF a great place to work, and is
accountable to our Executive Board. The EPE focuses on values
and culture, high performance and effective communication, and
provides oversight, scrutiny and input to the people-related
activities across DWF that promote engagement, productivity,
commitment and discretionary effort. The EPE has been
instrumental in addressing the key issues identified through our
Engagement Surveys, evolving the role of People Partners across
the business, and achieving a positive uplift in Pulse Survey scores.
Employee Forum
The EPE is supported by our Employee Forum, to ensure we
take into consideration the input of employees at all levels of the
business. The primary role of this Forum is to improve the flow
of communication from the Board to the ground floor and vice
versa, acting as a way for employees to voice their ideas as well
as their concerns. It also provides the opportunity for DWF to
consult employees over business-related issues and gain their
commitment to change. While still in its formative stage, it has
started to constructively challenge workplace policies and
practices, with a view to making improvements, streamlining
processes and suggesting better ways of working, to make
DWF a great place to work.
Listening to our employees
The Board understands that listening to our employees is key.
We have put in a great deal of effort over the last few years to
ensure engagement of our people gets the focus and time it
needs, and in doing so, creates the impact we want. This effort
includes a range of communications and engagement tools,
such as Pulse Surveys, to involve staff and to share messages
and information on staff engagement, highlighting that the
Company is listening to and addressing their needs.
DWF Group plcAnnual report and financial statements 2020 39
Pulse Surveys
In 2019, we moved away from traditional annual surveys
to a more frequent digital platform that helps leaders and line
managers create plans, focusing on the improvements that
matter the most for our people.
Recognition
In response to feedback, and where we scored below the
industry benchmark, we implemented a number of key
engagement measures. We launched a new digital recognition
platform, DWF Achievers to recognise and celebrate people
who live our values and help shape our culture through their
performance and the contributions they make to DWF.
Global Pulse Survey
Headline Results – June 2020
Overall company employee engagement score:
The Engagement Index score is a composite metric
based on 3 questions:
1. I would recommend this as a great place to work
2. I rarely think about looking for a job elsewhere
3. I am enthusiastic about my job.
Engagement score
76
Response rate
67%
We also launched our annual Rubie Awards in 2019. It was the
first time we have celebrated together as a business to reward
the hard work and dedication of our people. As DWF grows
across the globe, it’s more important than ever we recognise the
individuals who are living the values and being true role models.
5 STAR Futures
We recognise that while talent is everywhere, opportunity
is not, particularly in areas with low social mobility.
Our 5 STAR Futures programme is designed to enable young
people to make the most of their potential – to be the best
version of themselves. Working with young people, we help
equip them with the business skills, confidence and resilience
to aim higher and achieve more.
In response to COVID-19, we are adapting our offering to continue
to support the education of young people. Moving to a virtual
approach will not only meet an immediate need, but enable the
impact of the programme to be experienced in more schools.
Investment in our people
One of the ways we attract talented people to our business is by
providing them with a clear strategy for their personal and career
development. People are at the heart of our business, so we try
to understand their needs and objectives fully before providing
solutions. Doing this enables us to provide the right solutions,
support their progression and measure their success. Having
a clear end point for us is key. Our main programmes are aligned
with our DWF values and behaviour, and mapped to our career
levels. We run this using our global platform, DWF Academy,
providing opportunities for colleagues from all over the world
to socialise and learn from each other. Our technology platform
means social learning and sharing knowledge happens
seamlessly across the business. Although our curriculum is
mapped to career levels, we encourage high-potential individuals
to attend sessions in the higher tiers, so they can build those
skills early.
Our aim is to attract and retain the best new talent as early as
possible in their careers. This may be at the apprentice or trainee
stage, or when newly qualified. Our highest retention rate is for
people in this category. Typically they grow with us and are great
advocates for our values and behaviour.
We care about the diversity of our candidates, and work with local
colleges and universities to provide insight days. Our recruitment
process is fair and inclusive, but the success of it depends on us
having a large and diverse pool of talent to select from. The aim
of the insight days is to demystify the legal profession and explain
the wide range of roles available, therefore attracting people who
may not have considered the legal profession before.
We have already reviewed and taken steps to ensure a more
consistent representation of DWF to attract candidates at every
entry point through social media channels, and removed
unnecessary jargon or selection criteria, particularly for entry-
level roles, to advance social mobility.
Wellbeing and benefits
Our approach is to improve the health and wellbeing of our
people through a combination of preventative, protective and
proactive interventions that address the cause as well as the
effect of any health and wellbeing issues. As we continue to
navigate this uncertain world, it’s important we continue to
focus on the human aspects of doing business, to increase
the resilience of our business and ensure, as far as is possible,
our people do not suffer stress as a result of their work.
Our collective health and wellbeing will be integral to the
sustainability of our business as we emerge from the COVID-19
crisis. As a business, we are ensuring our people get the
support they need to continue their work safely. We are issuing
regular, consistent and co-ordinated communications to all
employees, through multiple channels for maximum reach and
engagement, so all individuals are fully informed during this
time. We will continue to encourage open conversations about
mental health and the support available when employees are
struggling, to ensure they have a healthy work-life balance and
opportunities for development.
To help everyone maintain a healthy mind we have partnered
with Workplace Options, who provide a confidential helpline
to support anyone through difficult times. It is available globally,
24 hours a day, seven days a week. In light of COVID-19, which
started at the end of the financial year in the UK, we brought
forward the launch of a new digital GP service, enabling
colleagues to speak to a qualified doctor, any time of day
or night, directly from their mobile, ensuring employees had
access to medical support if they needed it.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 40
Sustainability report continued
Our approach to benefits is to provide our employees with
a total reward package in line with our position in the market,
and we do this by constantly benchmarking ourselves against
our peers. This financial year saw DWF’s UK business move
to a new flexible benefits platform which will be rolled out
internationally throughout 2020/21, providing employees with
a single platform to access all of their benefits, including shares
and pensions and, where appropriate, the freedom to choose
the benefits that suit their lifestyle.
In addition to the above, and in light of COVID-19, we have
reviewed our global medical offering and strengthened it, by
increasing claim limits, adding new categories, and making it
easier to claim. This ensures it meets the needs of challenging
times we will have throughout 2020, and that we provide the
right level of cover for the continued health of our people.
Work/life balance
We have always wanted to create a high performance, flexible,
family-friendly workplace.
We see flexible working as a way of improving our operational
effectiveness, and we have moved to a culture that focuses
on results and performance, not attendance or ‘presenteeism’.
As our work and non-working lives merge due to COVID-19,
a focus on striking the right balance will perhaps never be more
relevant than it is today.
The Top Employers for Working Families Benchmark allows
us to measure our work-life policies and activities with current
practice, and identify areas where we should target our future
initiatives. The benchmark helps us build a comprehensive
picture of the flexible and family-friendly environment within
our business, and we are proud to have been awarded Top 10
Employer status again this year.
We also use our Pulse surveys every six months, to gain valuable
feedback and help ensure our colleagues feel supported.
Pulse survey question
DWF Benchmark*
I am able to balance work and personal
life in a way that works for me
76%
71%
Are the expectations of me at work
reasonable?
I am getting what I need from my
manager
76%
76%
78%
70%
* Average scores of other businesses across a range of industry sectors
DWF featured in
Legal Cheek as one of the
best law firms for work/
life balance in 2019.
Mindful business charter
In 2019, we became an early adopter of the Mindful Business
Charter (‘MBC’), a collaboration initially between the financial
services and legal sectors to change the way we work by
removing avoidable stress.
As a signatory, we pledge to promote a culture of openness
about mental wellbeing, ensure we include responsible
business as an area of assessment during significant
procurement processes, and do what is necessary to change
working practices in support of the principles of the Charter.
We are starting to see greater consideration to colleagues
of the need to switch off and create boundaries between work
and rest. We’ve also embraced ‘smart’ meetings and have
been respectful of each other’s time when planning meetings.
Responsible business –
doing business the right way
Anti-bribery and corruption
DWF maintains an Anti-Bribery and Corruption policy which
is supported with mandatory online training for all employees.
Having policies like this, that encourage individuals to raise
concerns, is central to our ethical and supportive business
culture. We are committed to maintaining an open culture with
the highest standards of honesty and accountability, a culture
where colleagues can report any legitimate concerns
in confidence.
As with all our procedures, we strive to ensure those to prevent
bribery and corruption by anyone associated with the business
are proportionate to the bribery and corruption risks DWF faces.
DWF’s risk and control culture is set at the top. Our Board,
Risk and Audit Committees, along with our senior leaders,
are committed to preventing bribery and corruption and are
involved in the determination of bribery and corruption
prevention procedures.
In 2020, we will launch a Global Code of Conduct and a Speak
Up helpline. Their purpose is to help us do the right thing, to
ask the right questions and make the right decisions every day.
The code will cover areas such as respect for human rights,
discrimination, conflicts of interest, information security, bribery
and corruption, and whistleblowing.
DWF Group plcAnnual report and financial statements 2020
41
For further information on the Board and Risk Committee’s
role in ensuring good governance of anti-bribery and corruption,
please see pages 71 and 72 in our Corporate Governance report.
Human rights and modern slavery
Human Rights
A responsible and sustainable approach to doing business is
central to our purpose, and in conducting our business activities,
we respect these rights, and seek to uphold and promote them
as part of the way we do business, working and collaborating
with our people, communities, suppliers, charities and other
appropriate stakeholders.
We support the principles of Human Rights set out in the
Universal Declaration of Human Rights, the International
Labour Organisation (‘ILO’) core labour standards and we are
a signatory of the United Nations Global Compact. In addition,
we support the UN’s wider development agenda, including
the UN Sustainable Development Goals.
As a global legal business, we have a responsibility to go beyond
stating our commitment to respecting human rights. We must
demonstrate what we do in practice to protect rights across our
day-to-day business operations, simply because it is the right
thing to do. This includes ensuring that if we identify any human
rights violations, we endeavour to take appropriate action swiftly.
As a responsible business, we will build on the work done so
far, and continue to affirm our values, raise awareness among
our people, clients, communities and suppliers, and take action
where necessary.
Modern Slavery
There is no place for modern slavery in our business or our
supply chain. Our approach is to understand how and where
modern slavery occurs, and to continuously review and improve
the policies and processes we have in place to prevent it.
In addition to our Anti-Slavery Policy, which sets out our
zero-tolerance approach, we have a number of policies and
procedures in place that reflect the way we do business, and
set out expectations to all our employees. These policies reflect
our commitment to responsible business policies and practices
that are fair, transparent and inclusive.
We make sure all our employees have the appropriate rights
to work and are employed in accordance with local legislation.
Policies make it clear that we will support and protect
‘whistleblowers’ and will not tolerate retaliation of any kind.
In the last 12 months we had no reported incidents of slavery
or trafficking in our operations.
All new joiners to our company are made aware of our Modern
Slavery Statement, Anti-Slavery Policy and online training via
our induction and on-boarding portal.
Working with suppliers
We expect all DWF suppliers to implement a zero-tolerance
approach to slavery, forced labour and human trafficking, and
to comply with all local and national laws and regulations.
In addition to our Supplier Code of Conduct, we developed our
Ethical Sourcing Questionnaire in 2019, as a self-assessment
tool, covering a range of topics including modern slavery and
forced labour.
We group expectations of our suppliers into six key areas:
− Human rights
− Health & safety
− Responsible supply-chain management
− Inclusion & diversity
− Business integrity
− Environmental management.
Our procedures are designed to identify and assess areas
of potential risk, and over the past year we have developed
a structured approach for any employee involved in purchasing
goods and services on behalf of DWF, to reinforce the reality
that modern slavery is a potential risk within supply chains and
must be factored into the decision-making process.
In the last 12 months, we had no reported incidents of slavery
or trafficking from our suppliers.
Tax transparency
Our approach to tax is published in our tax strategy.
We recognise the important part that taxes play in generating
revenue for governments across the globe to meet their
economic and social objectives, and the important role that we,
as a responsible business, play in contributing to society by
paying and collecting taxes.
Areas of focus in 2019/20
− We have further developed our modern slavery
awareness training and materials to engage our people
− 1,749 employees (54%) have already completed our new
modern slavery training
− We have continued to engage with our suppliers
and clients
− We participated in the UK Home Office Transparency in
Supply Chains Consultation, through membership of the
Greater Manchester Modern Slavery Business Network
− We have attended external conferences to keep
informed of best practice, and take up relevant speaking
opportunities to talk about what we do
− We continue to promote a ‘speak-up’ culture within our
business, to promote openness and transparency, and
encourage all of our employees or those working on our
behalf to raise any concerns.
We comply with all statutory obligations and conduct our tax
affairs in a clear, fair and transparent way. Our CFO is the Board
member with executive responsibility for tax matters, and
presides over an effective system of tax-risk management
maintained by an in-house tax team staffed with appropriately
qualified individuals. As a responsible business, we do not
undertake aggressive tax planning, and seek to develop positive
and open relationships with tax authorities.
Health and safety
Every business has health and safety responsibilities, and
DWF is no exception. Managing the welfare of our people is key
to our business. Businesses are under increasing scrutiny to
demonstrate responsibility and commitment to health and
safety management.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 42
Sustainability report continued
We are committed to ensuring colleagues have a reasonable
awareness of health and safety issues, and to publishing
information on health and safety regularly through the various
channels available. Health and safety information and updates
are available on the Group’s intranet and distributed via email,
to ensure all colleagues have access to relevant information.
We distribute specialist information and briefings internally as
appropriate. We provide on-site contractors and other suppliers
with relevant information relating to their role in fulfilling our
health and safety policies, objectives and procedures.
For training, our approach aims to minimise the health and
safety risks of our business activities and to the welfare of our
people, and to also to minimise any associated costs in not
negating such risks and reputational risks to DWF.
The Group’s Health & Safety Manager reports to the Board
quarterly, and presents a comprehensive annual report to the
Board on all Environmental, Health and Safety matters.
Data Protection
As a multi-disciplinary global business, sharing data enables
DWF to better serve our employees, and to perform shared
services for mutual clients of multiple DWF group entities,
including legal services and the wider connected services.
DWF meets its legal and regulatory duties and responsibilities
for protecting the personal data we have within our care, while
maintaining the standards of confidentiality that the people
whose data we process would expect from a fully compliant
global organisation. Our policies and procedures are built on the
world-recognised principles contained within the EU General
Data Protection Regulation, that also complement and
fortify local data protection legislation affecting each of our
international jurisdictions.
Responsible business –
community engagement
Social value
As a business, we understand we have the power to change the
world around us. Helping people and communities thrive is good
for everyone and good for business. Through our responsible
business agenda, we aim to inspire, engage and challenge our
people to tackle some of society’s biggest issues.
Our priorities are to increase the numbers of young people from
low income and diverse backgrounds who have improved their
confidence, and build a strong and positive link between schools
and the world of work. This demystifies the workplace, enabling
them raise their aspirations.
Focus on advancing social mobility
DWF is a Board member of PRIME, an alliance of law firms
across the UK, committed to improving access to the legal
profession through work experience. Every firm involved in
PRIME makes what we call the PRIME Commitment, to ensure
we are offering meaningful work experience for children of school
age. In 2019, we joined with other PRIME members to design
and deliver Legal Insight workshops in a number of UK social
mobility ‘cold-spot’ areas. We hosted a session in Leeds and
other law firms hosted in Scotland, Manchester and Birmingham.
Supporting communities
Working with the Namene Solar Light Company, we were able
to donate and distribute over 1,000 of their solar lamps in
Zambia. The lamps provide basic lighting needs to low-income
families living without access to electricity, or as a first-response
light in the aftermath of humanitarian crisis. In Africa, the lamps
will replace kerosene lamps and paraffin candles, which are
costly, a fire hazard, and cause lasting health issues.
Combating homelessness
Colleagues from three DWF offices spent a night out in the
cold as part of The Big World Sleep Out, to raise funds and
awareness for those who are homeless or displaced.
The team raised £5,000 and featured on the mural at the
UN summit on homelessness in New York.
DWF Foundation
The DWF Foundation is an independent charity, founded by
DWF in 2015.
Our employees raise funds to enable the Foundation to provide
grants to charities whose work supports people in locations
where we have a presence, and offers the Foundation, and
the charities it supports, access to skills-based volunteering.
Employee volunteering, where our staff donate time and skills
during work hours to tackle local social issues, is an effective
and powerful way for us to continue to invest in our people
and our local communities.
Since its launch, 159 charities have received
We focus on education, employability, health and wellbeing, and
homelessness, to foster inclusive growth, reduced inequality
and strong and sustainable communities.
£374,612
In 2017, we became the first legal business in the UK to launch
a CSR portal, IMPACT, that creates a profile of community
investment for everyone at DWF and enables us to log community
benefits in real time. This bespoke social-value-reporting tool tracks
and records the value of our social-value efforts. The process is
completely automated and converts activity into meaningful
social-value outcomes. From May 2019 to April 2020 – a total
of 24,724 community investment hours were logged.
Globally, over 270 million young people are not in education,
employment or training, so our priority is to develop a variety
of opportunities for young people to increase their confidence
and resilience, and to gain valuable employability skills to
become work-ready.
The Foundation supports charities which demonstrate impact
in one or more of the following focus areas:
− Education
− Employability
− Health and Wellbeing
− Homelessness
In the financial year ending 30 April 2020, grants awarded
amounted to £126,164.
DWF Group plcAnnual report and financial statements 2020 43
Grant Giving up to March 2020
55%
Further information on greenhouse gas emissions can be found
on page 95 of the Directors’ report.
Aside from travel and energy, and as part of the ISO 14001
Certification within the UK, we also commit to the following
targets in an effort to help reduce our carbon emissions:
− We maintain a target of recycling at 85% per site. In the year
ended 30 April 2020, we met this target, with an average
of at least 90% recycling across the Group’s UK operations.
− To re-use all suitable office furniture and equipment
(e.g. chairs, desks, photocopiers) or donate to charity
wherever possible.
19%
− To continually seek to reduce energy use through
proactive estate management, space-neutral expansion
and agile working.
10%
16%
Education
Health and wellbeing
Employability
Homelessness
Responsible business –
respecting the environment
Environmental management
Climate change is our most pressing shared challenge and
opportunity.
In supporting the principles of sustainable development, we
have in place an environmental management system to identify
and control the impacts of our business, and enhance current
working practices.
As a global company, this means:
− we manage our carbon emissions
− we ensure efficient use of resources by following the
‘Reduce, Reuse, Recycle’ waste hierarchy
− we invest in technology to help further our sustainability
agenda
− in the UK, we maintain ISO14001:2015 certification
− we develop, apply and promote environmental best practice
to enhance our resilience to climate change.
Carbon emissions generated by the energy we use and the
travel we undertake, affects our contribution to climate change.
Our ambition remains to minimise our impact as a low-carbon
and more-circular business.
Reducing carbon emissions
We have set a global target of remaining under three tonnes per
person, per year (‘TPPPY’). While there was a 13% increase of
carbon emissions from FY18/19 to FY19/20, there was also an
increase in headcount, which meant our TPPPY decreased at
around 6%.
− To encourage the reduction of plastic bottles and single-use
plastics – we have sourced DWF re-usable cups and bottles
that we sell, with the money raised supporting our Charitable
Foundation. We have also decreased the number of drinks
sold in plastic bottles where we have bistros on site.
We intend to adopt these targets at all our international locations
where possible.
Governance
The Group Health & Safety Manager reports quarterly to
the Board, plus provides an annual comprehensive report for
all Health, Safety and Environmental matters. In addition,
a bi-annual report is presented the Board detailing information
on all ISO Standards.
Training
We aim to minimise the environmental impacts of our business
activities, and the associated costs and risks to DWF and the
wider community. As part of our overall corporate responsibility,
we believe we should, where practical, encourage our
employees, suppliers, contractors and customers to improve
their own environmental performance – whether this is at work,
at home or within the wider community.
Priorities
Priorities over the next 12 month will include ensuring we
remain under our 3 TPPPY CO2 target, and retaining the
ISO 14001:2015 certification. We will set new targets in
December 2020.
As we are working in unprecedented times, we will
continue to monitor and evolve the existing targets as
appropriate. Due to COVID-19, there is currently a travel
ban, which we see as an opportunity to reduce travel,
so reducing our emissions. Likewise, office waste has
also seen a significant drop. New ways of working have
allowed us to use the technology available, so also bringing
a reduction in paper use across the business.
These opportunities will bring a significant, though
temporary, drop in our CO2 emissions, and have given us
the opportunity to consider new ways of working, which
may produce a further longer-term reduction in our
carbon emissions.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 44
Non-financial information statement
Disclosures of non-financial information matters, including a description of policies,
due diligence processes and outcomes, where applicable, are available as follows:
NFI matter
Further information incorporated into this statement by reference
Environmental
Responsible business – respecting the environment
Annual greenhouse gas emissions
43
95
Company’s employees
Responsible business – supporting our people
37 to 40
Culture, Employee policies and Diversity and Inclusion
37 to 40 and 62 and 63
Social
Responsible business – community engagement
42 and 43
Respect for human rights
Responsible business – doing business the right way
41
Anti-corruption and anti-bribery
Responsible business – doing business the right way
40 to 42
Business model
Our business model
Principal risks and uncertainties
Principal risks and uncertainties
Non-financial KPIs
Strategy at a glance
Responsible business – supporting our people
Responsible business – respecting the environment
12 and 13
46 and 47
18 and 19
39
43
DWF Group plcAnnual report and financial statements 2020 45
Risk management
How we manage
risk at DWF
Risk management
Risk management is key to our operation. It helps us protect our
business (including our people, our assets and importantly our
reputation) and helps us create long-term shareholder value.
The Group maintains an enterprise-wide risk management
framework to manage all risk types, with rigorous policies and
procedures designed to ensure it mitigates the risks the Group
is exposed to.
Risk appetite
The Group’s Risk Appetite Statement articulates our philosophy
and approach to the management of the Group’s principal risks,
defines specific parameters, guides decision making and
ensures appropriate governance over taking risks. The Board
is responsible for setting the Group’s risk appetite, which it
reviews and approves at least annually. The Risk Committee
is responsible for overseeing the development, implementation
and maintenance of the Group’s overall risk management
framework and risk appetite. It must ensure they are aligned
with the Group’s strategic objectives and emerging regulatory,
corporate governance and industry practice.
Overall Risk Appetite Statement
The Group is a multi-jurisdictional legal services provider.
The Group will only behave in ways that:
Do not conflict
with the Group’s
values and are aligned
with its risk appetite
and business
strategy
Do not expose the
Group’s capital
position or the
resilience of its
services
Group risk management process
The Board is responsible for maintaining and reviewing the
effectiveness of the Group’s risk management activities.
These activities are designed to identify, assess, respond to,
report on and monitor the risks that might threaten our ability
to achieve the Group’s objectives within its risk appetite.
Risk management and compliance is not just the role of our
Risk team. We follow the Three Lines of Defence approach to
risk management, where risks are owned and managed within
the business.
Our business teams form the first line of defence by applying
policies, procedures and controls.
Members of our leadership teams are responsible for routine
verification and providing accurate and up-to-date information
on key risk and control assessments.
The Risk team oversees this, supported where necessary
by other control functions. This constitutes the second line
of defence, and enables an aggregation of the risk profile for
the Group. The regulatory team also conducts routine monitoring
on areas of risk, such as financial crime compliance, unauthorised
data access requests and conflicts of interest.
The third line of defence is Internal Audit and assurance,
which undertakes independent and regular reviews of the
effectiveness of policies, procedures and controls, including the
risk management framework and risk and regulatory team itself.
Are aligned with the
needs of the Group’s
clients and ensure they
are treated fairly
Are always in
accordance with local
laws and regulations
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information COVID-19
The pandemic presents an unprecedented challenge
and we, like many businesses, are experiencing a period
of disruption and uncertainty. We are open for business in
each of our locations, where our priority remains to ensure
the health and wellbeing of our people and their families,
while continuing to provide the service our clients expect.
The Risk team has facilitated ongoing, documented risk
assessments to identify emerging risks to the business
during this time, and continues to communicate these
assessments to the Risk Committee and the Board.
DWF has a well-established business-continuity plan,
triggered following the commencement of the pandemic.
Teams from Risk, IT, HR, Finance, Facilities and Client
Development quickly identified, and continue to update,
the steps to take to prioritise the wellbeing of our people,
clients and other stakeholders, while protecting our ability
to support our clients.
We have followed the guidance provided by relevant
Governments and healthcare authorities, which has resulted
in restricted access to our offices, and in more agile working
arrangements for a significant proportion of our people.
We have supported this agile working in the business
for a number of years, and we are well placed to continue
operating successfully in the current environment.
Our remote working capability has meant that more than
95% of our people are equipped to work from home.
46
Risk management continued
Group risk profile
The Board has developed a Risk Taxonomy to ensure we
consider the full and evolving spectrum of risks the business
faces. We categorise the principal risks by the six areas
shown below:
Group Taxonomy
Principal Risks
(Level 1)
Business,
commercial
and strategy
Conduct
and ethics
Level 2
Macroeconomic
Legal and political
Strategy
Business model
Commercial risk
Client outcomes
Ethical practices
Regulatory compliance
Other compliance:
employment, HSE etc
People
People
Operational
Processes
Systems
Finance
and reporting
Financial management and controls
Monetary
Financial reporting
Financial crime
Fraud
Money laundering
Bribery and corruption
Terrorist financing
Market abuse
Principal risks
Informed by the work undertaken during the year on the Risk
Taxonomy, described above, the table on the following page
describes the principal risks (Level 1) the Group faces, with
examples of the Group’s approach to mitigating those risks.
Mitigating actions are provided for illustrative purposes and
should not be taken as the full list of associated mitigating
actions for each identified risk. Some specific Level 2 risks
which merit further comment are included.
DWF Group plcAnnual report and financial statements 2020 47
Principal risks and uncertainties
Business, commercial, strategy
Conduct and ethics
Business
model
Movement in year
Regulatory
compliance
Movement in year
Client
outcomes
Movement in year
Details of risk
Details of risk
Details of risk
There are several risks to the Group
arising from the way we do business
and, in particular, our business model.
Following a period of M&A, the risks
faced by the Group include the failure
to integrate the Group’s policies,
procedures and financial controls within
newly acquired teams.
The Group operates in an increasingly
complex global environment. Many of its
activities and services are subject to
legal and regulatory conditions which are
continually evolving.
The Group provides professional legal
services including complex legal advice.
As with all professional services, there
exists the risk of liability from negligence,
breach of client contract and other claims
or complaints by clients.
Mitigating actions
Mitigating actions
Mitigating actions
The Group operates a detailed integration
programme to align all new offices and
teams with the DWF ways of working.
The Group maintains strong relationships
with all its key regulators, maintaining
a dialogue to remain aware of impending
regulatory and legal developments.
The Group aims to ensure its colleagues
are appropriately trained, supervised and
incentivised to ensure their behaviour
and activities do not inadvertently result
in poor outcomes for clients.
Operational
Processes
systems
Movement in year
Finance and reporting
Financial crime
Finance and
reporting
Fraud and
money laundering
Movement in year
Movement in year
Details of risk
Details of risk
Details of risk
Process risk relates to the design,
execution and maintenance of key
processes, including process
governance, clarity of roles, process
design and execution.
COVID-19 implications for the business
have seen an increased risk of liquidity
constraints or reduced profitability
that could result in a breach of bank
covenants. In addition, in the face of
client decisions on payment delays, we
have had to spend more time to ensure
the validity of our forecasting.
Clients or counterparties may attempt
to use the Group to commit fraud or
to launder money.
Mitigating actions
Mitigating actions
Mitigating actions
The Group maintains documented
target operating models and enhanced
training and development to help
mitigate process risk.
Regular reforecasts inform the
introduction of measures to save costs,
as well as regular discussions that take
place with key stakeholders.
The Group has designed its systems,
controls and mandatory training
programmes to mitigate the risks,
and identify any suspicious activity.
Processes and controls are subject to
independent audit and assurance.
More frequent and focused discussions
with clients are informing the more
regular reforecasting processes.
Key:
Stable
Increased
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 48
Viability statement and going concern
In accordance with the Corporate Governance Code, the
Directors have assessed the viability of the Group, taking
into account the current financial position of the Group
including our financing arrangements, the business model
at the time of approving this report and the uncertain
environment due to the impact of COVID-19. The Directors’
assessment was over a three year period to 30 April 2023
taking account of the potential impact of the principal risks
documented in the Strategic Report and accepting that
whilst the COVID-19 pandemic is ongoing, there are
external factors that could affect Group trading that are
difficult to predict with as much confidence as would have
been the case pre-pandemic.
The Group experienced a material impact from COVID-19 in the
final quarter of the year, seeing revenue fall away suddenly and
to an unprecedented degree due to a number of factors caused
by COVID-19. This impact materially reduced profit expectations
for FY20 as the April year-end coincided with the peak impact
of the pandemic, and it was not possible to mitigate the income
statement or cash impact of COVID-19 due to the lead-time
required to reduce costs and mobilise operational initiatives
around working capital management. In response to this impact
a number of actions were taken to protect liquidity, access to
funding and near-term profit protection:
− Financial covenants were reviewed and it was agreed with
the banking syndicate, with whom the Group has strong
relationships, to relax the EBITDA to net debt covenant (the
‘leverage covenant’) from 1.5 times to 2 times on the April and
July testing dates and 1.75 times on the October 20 and
January 21 testing dates, and back to 1.5 times EBITDA by
April 21.
− An additional £15m contingency RCF facility was put in place,
up to July 2021 (with an additional six month extension
available to the Company), to provide extra funding should
there be any further adverse impact on working capital.
This facility has not been drawn and is not envisaged to be
required based on current modelling assumptions.
− Cost reduction measures were agreed and executed to
secure £15m of cost savings in FY21 to remove excess
capacity from the business as a result of lower activity levels
due to COVID-19.
− Operational initiatives were launched to improve lockup
management and reduce working capital consumption by
improving billing and collection processes.
− Whilst no staff were furloughed under the UK government
scheme, the Group availed itself of a number of permitted tax
deferrals made available by HMRC which will be repaid over
the course of 2021.
The actions above were a prudent reaction to a highly unusual
situation due to the sudden and severe impact of COVID-19
that impacted Q4 of FY20. The timing of the COVID-19 impact
followed a period of heavy investment whereby capital had
been deployed on the strategic acquisition of RCD in Spain
(December) and Mindcrest (January) – both acquisitions
continue to perform well and serve as a differentiator in the legal
sector. These acquisitions were progressed with the anticipation
that the traditionally strong final quarter of the year would
replenish the cash deployed and generate sufficient EBITDA
to keep the leverage covenant within more normal parameters.
Under more typical circumstances, the COVID-19 impact, whilst
significant, would not have necessitated such material actions
around liquidity and covenants in particular, and the Directors are
of the view that as trading normalises FY21 will transition the
business back to a lower level of borrowings and leverage.
DWF Group plcAnnual report and financial statements 2020 49
Whilst the impact of COVID-19, and the risk of future disruption,
could potentially be material the Directors consider the following
characteristics of the legal sector and the Group instructive in
forming their conclusions on viability:
− The ongoing profitability of the business in FY20,
generating £21.5m of Adjusted EBITDA despite the severe
Q4 COVID-19 impact.
− The annuity and resilient nature of certain divisions and
services such as Insurance and Litigation.
− Low exposure to sectors more severely impacted by
COVID-19.
− The ability to flex the acquisition strategy to allow cash to
replenish in the business after the timing of COVID-19
exacerbated the stretch on cash from two recent
strategic acquisitions.
− The availability of mitigating actions to control costs.
− A strong relationship with the Group’s banking syndicate who
continue to provide facilities which ensure ongoing liquidity
with material headroom.
− Whilst the Group has no current plan to change the use of its
real estate portfolio the experience of agile working as part
of our COVID-19 response may give opportunities to review
office space in the future.
− Operational interventions being implemented to improve
working capital performance, with the aim of reducing lockup
and therefore net debt.
The Directors therefore consider that the business model is
appropriately robust, and that there are sufficient mitigating
actions available to the Board, that the Group is suitably resilient
to deal with the crystallisation of key risks and/or adverse
economic conditions. On this basis, the Directors have
a reasonable expectation that the Group will continue to be
viable and meet all its liabilities as they fall due over the next
three years.
Approval of the Strategic report
By order of the Board
Jonathan Bloomer
Chairman
7 September 2020
Banking facilities, which in addition to the contingency facility
and various ancillary facilities, include a rolling credit facility
of £80m that matures in January 2022 (with an additional one
year extension available to the Company to January 2023) are
considered to be sufficient for the Group’s purposes based on
current projections. It is assumed that these facilities will be
renewed successfully in 2021. The leverage covenant is set at
1.5 times EBITDA from April 21 onwards and the Group expects
to operate comfortably within this parameter for the forecast
period. The other covenants, being maximum net debt of
1 times equity, minimum 4 times interest cover, WIP and
debtors being a minimum of 2 times net debt and the number
of members in the group remaining above 180 are all projected
to be fully compliant with significant headroom. The directors
consider going concern in the twice-yearly reporting cycle
and short term cash flows are monitored on a monthly basis.
All results and forecasts confirm full covenant compliance,
and sufficient resources to settle liabilities as they fall due.
Base case budget assumptions for FY21, and medium term
modelling assumptions for FY22 and beyond, reflect that the
Group will operate in compliance with covenants and with
sufficient cash and access to banking facilities to meet all
obligations as they fall due. The timing of the FY20 annual
results announcement being moved to 8th September has
given the Directors visibility of trading performance and cash
flows for May to August and both profit and cash generation
have improved since the Q4 COVID-19 impact. It has also been
possible to assess the impact, so far, of the mitigating actions
outlined above. The Directors are of the view that the stronger
than expected trading performance in recent months and the
availability of additional cash and cost mitigations in the event
of further headwinds give confidence in the ongoing viability
of the Group. Mitigations available to the Group include further
cost cutting measures including bonus payments, deferral
of certain outflows, and review of the dividend policy and
reassessment of capital expenditure.
Long term viability has been considered over a three year period
with reference to an income statement, cash flow and balance
sheet model. This involves considering medium term business
plans, funding and liquidity requirements as well as sensitivity
analysis to account for a reasonable worst case scenario.
As with going concern testing, all indicators show full covenant
compliance after taking into account mitigating actions that the
Group would take in such a scenario. The Group’s current position
and principal risks have been considered, with those risks set
out in the Strategic Report. These risks have been considered
individually and in aggregate, and with reference to Group
strategy and external factors such as COVID-19 and adverse
economic conditions. In assessing the long term viability of the
Group the Directors considered different scenarios and performed
sensitivity assessment. These scenarios and sensitivities included
a reduction of revenue and working capital. These scenarios and
sensitivities did not indicate a mitigated reasonable worst case
scenario that requires any enhanced disclosure.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 50
Corporate Governance report – Chairman’s introduction
Jonathan Bloomer
Chairman
Dear shareholder,
I am pleased to introduce our Corporate Governance report
for 2020, our second since our IPO in March 2019. This report
sets out how we have ensured corporate governance remains
the foremost consideration for the Group, to satisfy both the
high standards of listed company corporate governance and
those specific to a regulated legal services business.
This has been a challenging year given the impact of COVID-19,
and it was therefore vital that we used our governance
framework to ensure effective decision making. In this way, we
were able to respond quickly to the needs of our people and
clients in a rapidly changing environment. I am proud of the way
our people responded to the disruption to our usual way of
working, and I want to thank them for their consistent hard work
and dedication to providing an excellent level of service for our
clients during these extraordinary times.
Culture and purpose
The Board understands that our people are vital to achieving
our strategy. It also understands its role in ensuring that we
establish our culture throughout the Group. DWF’s values are
at the heart of our culture, providing a clear foundation for our
people and the way we work together. Our values define our
organisation and how we operate. You can find more information
about our strategy, values and culture on pages 18 to 19 and
pages 37 to 40.
We have a collaborative and inclusive culture that underpins our
decisions. Our Diversity & Inclusion and Dignity at Work policies
make it clear that the Group takes a zero tolerance approach
to discrimination, bullying and harassment. Our Diversity &
Inclusion Leadership Group of 45 senior leaders from across
the world defines and executes our global inclusion strategy.
We have been following our current Diversity & Inclusion
strategy for almost three years now, but this year was the first
since we announced our targets for gender and BAME within
our senior leadership. These aim for at least 30% female
representation and 10% BAME representation in our senior
leadership by 2022. This year saw the divisions within our global
network create plans specific to their teams, people and areas
of practice, and set out their commitments to play a role in
achieving progress, appointing sponsors and champions to
maximise communication, and to understanding and creating
greater opportunities for mentoring and sponsorship across
our business. Please see pages 56, 58, 62, 63 and 66 of this
report for more information on the Board’s commitment to
Diversity & Inclusion and please see pages 37 and 38 of the
Sustainability report for information on the external recognition
of that commitment during the year.
COVID-19
COVID-19, and responses to it, affected the personal and
professional lives of our stakeholders around the globe.
We immediately recognised the need to adapt our ways of
working, making sure the safety of our people, clients and
suppliers remained our highest priority. Alongside invoking our
Business Continuity Plan, our Executive Board, guided by our
Risk team, introduced a number of additional measures to
enable a swift and effective response. The Board ensured that
it was able to dedicate the additional time needed to support
the business and provide good governance in the rapidly
evolving environment, meeting much more frequently
from March until June. Please see pages 16, 17 and 46
for further information.
Board composition and changes
Since the end of FY2019/20, there have been a number of
changes to the Board’s composition. The Nomination Committee
and Board discussed optimum Board composition and the
skills required to take the business forward, resulting in those
changes. I am confident we have a strong leadership team, to
make the right decisions in a challenging economic environment.
Sir Nigel Knowles succeeded Andrew Leaitherland in May 2020
as Group Chief Executive Officer. The Board would like to take
this opportunity to thank Andrew for over 20 years’ service
to the Group, recognising his tremendous influence on the
business, which he helped grow from a two-office UK law firm
to a global legal business with 33 offices and more than 4,000
people. He was also instrumental in achieving last year’s IPO.
We wish him all the best in his future endeavours.
DWF Group plcAnnual report and financial statements 2020 S
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Upon Sir Nigel becoming Group Chief Executive Officer,
Chris Sullivan was appointed as Chair on an interim basis until
the Board could select and appoint a new Chair. A committee
of independent directors was immediately formed to run
a selection process for a permanent Chair. I was delighted to
be appointed Chairman with effect from 1 August 2020. On the
same date, Chris Sullivan was appointed as Deputy Chairman,
alongside his role as Senior Independent Director.
Also in May 2020, Matthew Doughty, a Partner Director on the
Board, agreed to become our Chief Operating Officer, a new
position on our Executive Board. With effect from 22 October
2020, Matthew’s position on the Board will change from Partner
Director to Executive Director to reflect his role as Group Chief
Operating Officer.
Finally, we have selected two new Partner Directors, Seema
Bains and Michele Cicchetti, who will take their place on the
Board with effect from 22 October 2020. Please see page 65
of the Nomination Committee report for further information.
For details on the Board’s processes for selection and
appointment, please see the Nomination Committee report
on pages 64 to 66. We continue to comply with the
recommendation in the UK Corporate Governance Code 2018
that at least half of our Board members, excluding the Chairman,
are Non-Executive Directors whom the Board considers to
be independent.
Best practice requires us to ensure the Board and its
committees have an appropriate balance of skill, experience,
independence and knowledge of the Company. It is also
important to address Board diversity and create a positive
gender balance in line with the recommendation of the
Hampton-Alexander review. The Company currently has three
women on the Board (33%) (rising to four an appointment of
Seema Bains to the Board on 22 October 2020 (36%)) and three
women on the Executive Board (25%). For full details of the
Board and Executive Board composition, please see pages 52
to 55 of this report.
I hope you find this report useful. Our AGM is scheduled to take
place on 21 October 2020. We have considered how we will
hold the AGM this year in light of the impact of COVID-19, and
full details of the arrangements are set out in the Notice of
AGM, available on dwfgroup/en/investors.
Jonathan Bloomer
Chairman
51
Corporate Governance at a glance –
UK Corporate Governance Code
Statement of compliance with the UK Corporate
Governance Code 2018 (the ‘Code’)
For the year ended 30 April 2020, DWF Group plc
was subject to the Code (available from frc.gov.uk).
The Board is pleased to confirm that DWF Group plc
applied the principles, and complied with all the
provisions of the Code throughout the year.
You can find further information on compliance with
the Code as follows:
Board leadership and Company purpose
57 to 63
Pages
The role of the Board
Company’s purpose, values and strategy
Effective controls and risk assessment
Shareholders and stakeholders
57
18 and 19
and 37 to 40
63
14 to 16
Workforce engagement
37 to 40 and 62
Division of responsibilities
59 to 62
The role of the Chairman
Division between the leadership of
the Board and the Executive Board
The role of Non-Executive Directors
59
59
59
Effective and efficient running of the Board
57 to 62
Composition, succession and evaluation
58 to 66
Appointments and succession
Composition of the Board
Evaluation of the Board
64 to 66
58
58 and 65
Audit, risk and internal control
67 to 72
Independence and effectiveness of
internal and external audit functions
68 to 70
Fair, balanced and understandable assessment
69
Risk-control framework and principal risks
45 to 47
and 71 and 72
Remuneration
73 to 91
Executive remuneration and long-term strategy
73 to 91
Transparency and independence
76 and 77
Documents available at dwfgroup.com/en/investors
DWF Group plc Articles of Association
Matters Reserved to the Board
Terms of Reference for Board Committees
Gender Pay Gap Report and Gender Pay Gap Action Plan
DWF Group plcAnnual report and financial statements 2020
52
Board of Directors
Jonathan Bloomer
Chairman
Appointed to the Board
1 August 2020
Chris Sullivan
Deputy Chairman (since
1 August 2020) and
Senior Independent Director
Appointed to the Board
November 2018
Committee memberships
Nomination Committee (as Chair)
Remuneration Committee (both from 1 August 2020).
Committee memberships held during the year ended 30 April 2020
Audit Committee, Nomination Committee,
Remuneration Committee and Risk Committee.
Jonathan has over 40 years of experience in financial services. He has previously
held a number of board positions including Chairman of the JLT Employee
Benefits Group, Senior Independent Director of Hargreaves Lansdowne plc,
Non-Executive Director of Railtrack plc and director of Egg plc. From 2006 to
2012, Mr Bloomer was European Partner at Cerberus Capital. Between 2000
and 2005, he was Group Chief Executive Officer of Prudential Group plc, having
previously served as Deputy Group Chief Executive Officer and Group Finance
Director. Prior to his time at Prudential, Mr Bloomer held senior roles at Arthur
Andersen. Jonathan is a Fellow of the Institute of Chartered Accountants in
England and Wales.
Jonathan is currently Chairman of Morgan Stanley International, Arrow Global
Group plc and SDL Group Limited.
Sir Nigel Knowles
Group Chief Executive Officer
since 29 May 2020 (Chairman
until 29 May 2020)
Appointed to the Board
November 2018
Appointed Group Chief Executive
Officer
29 May 2020
Committee memberships held during the year ended 30 April 2020
Nomination Committee (as Chair),
Remuneration Committee.
Sir Nigel spent over 38 years at DLA Piper, a global law firm, where he was Global
Co-Chairman and Senior Partner, and, previously, Global Co-CEO and Managing
Partner from 1996 to 2015. During his tenure as leader of DLA Piper and its legacy
firms, revenues of DLA Piper grew from £52m to in excess of £1.5bn.
He received a knighthood in 2009 in recognition of his services to the legal
industry. In 2015, he was awarded the Legal Business ‘Outstanding Individual
Achievement Award’ and in 2016 the Financial News ‘Editor’s Choice’ award.
Sir Nigel holds an LLB degree from the University of Sheffield and a Postgraduate
Diploma in Legal Practice from the College of Law, Chester. He received an
Honorary Doctorate of Laws from the University of Sheffield and is a Fellow of
Harris Manchester College Oxford.
He was admitted as a solicitor by the Solicitors Regulation Authority in 1980 and
is a registered foreign lawyer with the Law Society of Scotland.
Sir Nigel is currently Senior Independent Director of Morses Club plc, as well as
Chairman and Chair of the Remuneration Committee of Zeus Capital Limited.
He is a Trustee of The Prince’s Trust.
Samantha Tymms
(also known as
Samantha Duncan)
Non-Executive Director
Appointed to the Board
December 2018
Chris retired from his role as Chief Executive of the Corporate and Investment Bank
at Santander UK in October 2018. He was the Deputy Group Chief Executive at RBS
Group plc (‘RBS’) from 2014 to 2015, the Chief Executive of the Corporate Banking
Division at RBS from 2009 to 2014 and the Chief Executive of RBS Insurance (now
Direct Line Group) from 2006 to 2009. Chris started his career at RBS in 1975.
In recognition of his services to Scottish banking during his various roles at RBS,
Chris earned a Fellowship of the Chartered Institute of Bankers Scotland.
In 2014, he received a Lifetime Achievement Award from the European Leasing
Association for his contribution to the asset finance industry. In 2011, he was
recognised as the European Diversity Champion of the Year.
Chris has been a member of the Westminster Abbey Investment Committee since
2014 and was appointed as Chairman in 2017. He serves as a Non-Executive
Director of The Goodwood Estate Company Limited and is a Non-Executive Director
of Alfa Financial Software Holdings PLC.
Chris Stefani
Chief Financial Officer
Appointed to the Board
September 2018
Chris joined the management team of DWF LLP in April 2016 and was appointed
to the Board of DWF Group plc in September 2018. Chris has around 20 years
of experience in the professional services sector.
He was previously the Finance Director of Ernst & Young’s EMEIA Advisory
business (2014 to 2016), the Global Service Line reporting lead of Ernst & Young
London (2013 to 2014), a director in the UK Core Business Services Finance
team of Ernst & Young London (2012 to 2013) and the CFO of Ernst & Young
Republic of Ireland (2010 to 2011). Chris has extensive experience in advising
executive boards on all aspects of financial management, control, and
performance and profitability improvement, as well as a record of optimising
businesses to improve profits or cost savings while supporting revenue growth.
Chris holds an LLB degree from the University of Strathclyde and was admitted
to the Association of Chartered Certified Accountants in 2001.
Chris is a trustee and honorary treasurer of the UK-based charity KIDS, which
provides services to support disabled children and their families.
Teresa Colaianni
Non-Executive Director
Appointed to the Board
November 2018
Committee memberships held during the year ended 30 April 2020
Remuneration Committee (as Chair)
Audit Committee, Nomination Committee and Risk Committee.
Committee memberships held during the year ended 30 April 2020
Risk Committee (as Chair)
Audit Committee, Nomination Committee and Remuneration Committee.
Samantha (Sam) has more than 30 years of experience in the financial services
sector, including extensive work in corporate governance and risk management.
She has also undertaken a number of roles at the Financial Conduct Authority.
Sam served as a Non-Executive Director on the board of IG Group plc from 2013,
and from 2016 she chaired its risk committee. She left IG’s board in 2019. Sam has
also been a managing director at Promontory Financial Group (UK) Ltd since 2007.
Teresa (Tea) has more than 20 years of experience in human resources
management. She has previously served on the boards of Bounty Brands Holdings,
Mothercare plc, Royal Bournemouth and Christchurch Hospitals, Poundland Group
plc and Alexandra Palace Trading Company. Tea was Group Human Resources
Director at Merlin Entertainments plc (2010 to 2016) and Vice President of Human
Resources, Europe, of Hilton Hotels Corporation (2002 to 2009).
Tea holds a law degree from the University of Bari, Italy, and a master’s degree in
European community law, economics and politics from the University of Perugia,
Italy. She was admitted to the Italian Bar in 1995. Tea also holds an advanced
diploma in coaching and mentoring from Oxford Brookes University.
Sam holds a bachelor’s degree from the Roehampton Institute of Higher Education.
Tea serves on the boards of The Watches of Switzerland Group plc and SD Worx NV.
DWF Group plcAnnual report and financial statements 2020 53
Matthew Doughty
Partner Director
Appointed to the Board
November 2018
Luke Savage
Non-Executive Director
Appointed to the Board
November 2018
Matthew was appointed to the Board of DWF Group plc in November 2018 as
Partner Director and subsequently appointed to the new Executive Board role
of Group Chief Operating Officer on 29 May 2020. With effect from 22 October
2020, Matthew will be an Executive Director on the Board in his capacity as
Group Chief Operating Officer and will cease to be a Partner Director from that
time. Matthew has been a partner at DWF since June 2016.
He was previously a corporate partner at Squire Patton Boggs (2013 to 2016),
a corporate partner at Dorsey & Whitney (2009 to 2013) and a corporate partner
of Addleshaw Goddard (2007 to 2009). Matthew holds an LLB degree from the
University of Birmingham, and completed the Law Society Final Examination in
1993 from the College of Law, Chester. He was admitted as a solicitor by the
Solicitors Regulation Authority in 1996 and is a registered foreign lawyer with
the Law Society of Scotland.
Vinodka Murria, OBE
Non-Executive Director
Appointed to the Board
November 2018
Committee memberships held during the year ended 30 April 2020
Audit Committee (as Chair)
Nomination Committee, Remuneration Committee and Risk Committees.
Luke is deemed to have recent and relevant financial expertise.
Luke has more than 35 years of experience in the financial and professional
services sector, with experience in managing regulatory, analyst, investor and
banking relationships for major institutions. He has previously served as
a Non-Executive Director on the boards of HDFC Life Insurance Company Ltd,
Standard Life Employee Services Ltd, Standard Life Finance Ltd and Standard
Life Oversea Holding Ltd. He was Group CFO at Standard Life (2014 to 2017)
and CFO of Lloyd’s of London (2004 to 2014).
Luke holds a bachelor’s degree in electrical and electronic engineering from
Imperial College. He also holds an ACA qualification and is a member of the
Institute of Chartered Accountants of England and Wales.
Luke has served on the board of Liverpool Victoria Friendly Society Ltd as
a Non-Executive Director since January 2018 and chairs its audit committee.
He is also on the board of Numis Securities plc, chairing both its risk and audit
committees. Luke is Chairman of Chesnara PLC.
Committee memberships held during the year ended 30 April 2020
Audit Committee, Nomination Committee,
Remuneration Committee and Risk Committee.
Vinodka (Vin) has more than 25 years of experience in the software sector.
She was the founder and CEO of Advanced Computer Software Group plc and
Computer Software Group plc. Both were acquired by private equity in 2007
and 2015 respectively.
She was previously a Non-Executive Director of Zoopla Property Group plc,
Sophos plc and Chime plc. Vin was previously COO of Kewill Systems plc.
Vin has been an operating partner at HG Capital since 2016 and is a Non-
Executive director of Bunzl plc and Softcat plc.
Vin holds a bachelor’s degree in computer science, an MBA from the University
of London and a Doctorate in Business Administration (Honorary) from Edinburgh
Napier University. Vin became an Officer of the Most Excellent Order of the
British Empire in 2018 for her services in empowering women in technology.
Mollie Stoker
Group General Counsel and
Company Secretary
Appointed as Company Secretary
January 2019
Mollie is responsible for providing senior management with strategic legal advice,
while overseeing legal compliance, corporate governance and limiting risk.
Mollie has more than 19 years of private practice and in-house legal experience.
Previously, Mollie worked for the Suntory Beverage and Food Group, where she
was the Director of Business Development at Suntory Beverage and Food Europe
and the General Counsel and Company Secretary at Lucozade Ribena Suntory.
She also practised as a corporate/commercial lawyer at Orrick, Herrington &
Sutcliffe LLP, K&L Gates LLP and Slaughter and May, where she trained
and qualified.
Mollie holds a master’s degree in Classics from Cambridge University,
a postgraduate diploma in Law and a postgraduate diploma in Legal Practice from
the College of Law, London. Mollie is a member of the Law Society of England.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 54
Our leadership team – DWF’s Executive Board
Sir Nigel Knowles
Group Chief Executive Officer
Full biography can be found on
page 52
Chris Stefani
Chief Financial Officer
Full biography can be found on
page 52
Matthew Doughty
Group Chief Operating Officer
Full biography can be found on
page 53
Mollie Stoker
Group General Counsel and
Company Secretary
Full biography can be found on
page 53
Glyn Jones
CEO Insurance Division
Glyn joined the Group in 2007, following the DWF merger with Ricksons, where
he was a partner since 2003. He became CEO of the Insurance Services division
in May 2018. Glyn is responsible for executing the Group’s Insurance Services
division strategy, driving forward its activities and co-ordinating its practice
groups. Glyn specialises in dealing with complex catastrophic injury claims, as
well as other serious injury and fatal claims. He also advises on insurance policy
issues. In 2018, Glyn was ranked by the legal directory Chambers and Partners
Guide UK as a leader in his field for defendant work.
Previous experience
Previously, for six years Glyn was the Practice Group Partner for DWF’s
Catastrophic Personal Injury, Large Loss, Occupational Health and Casualty
team. He holds a BA Law and Languages degree from Manchester Metropolitan
University and passed the Solicitors Final Examination course in 1980.
Glyn was admitted as a solicitor by the Solicitors Regulation Authority in 1983
and is a registered foreign lawyer with the Law Society of Scotland.
Stephen Miles
CEO Commercial Services
Division
Stephen joined the Group in August 2014 as a partner and the CEO of the
Commercial Services division. He is responsible for executing the Group’s
Commercial Services division strategy, driving forward its activities and
co-ordinating its practice groups.
Previous experience
Previously, he was a partner at Pinsent Masons LLP, leading its financial
services, banking and restructuring, and employment and pensions practices.
Stephen holds an LLB degree from Reading University and a postgraduate
diploma in Legal Practice from the College of Law, Guildford. He was admitted
as a solicitor by the Solicitors Regulation Authority in 1991 and is a registered
foreign lawyer with the Law Society of Scotland. Stephen has acted both for
financial institutions and corporate borrowers, with particular expertise in private
equity and leveraged finance transactions.
Stefan Paciorek
CEO International Division
Stefan joined the Group in January 2015 and became CEO of the International
division in October 2017. He is responsible for the Group’s international strategy
and leading the development of its international business.
Previous experience
Previously, Stefan was a partner at Pinsent Masons LLP for 13 years. He holds
an LLB degree from Buckingham University and a Postgraduate Diploma in
Legal Practice from the College of Law, London. Stefan was admitted as
a solicitor by the Solicitors Regulation Authority in 1992 and admitted as
a solicitor in Northern Ireland. He is a member of the Chartered Institute of
Arbitrators and is a registered foreign lawyer with the Law Society of Scotland.
Stefan has more than 20 years’ experience in international dispute resolution
and project renegotiation, particularly within the technology and energy sectors.
He has acted for major corporations, Governments and not-for-profit
organisations, often in high-profile disputes, across jurisdictions.
DWF Group plcAnnual report and financial statements 2020 55
Jason Ford
Head of Connected Services
Helen Hill
Director of Human Resources
Jason joined the Group in January 2017 as a partner, and became head of the
Group’s Connected Services division in July 2017. He is responsible for the
Group’s suite of Connected Services.
Previous experience
Previously, Jason was the Chief Operating Officer at Triton Global Ltd (2013
to 2017), a multi-disciplinary alternative business structure and one of the first
businesses to be granted a licence following the implementation of the Legal
Services Act. Prior to that, he worked as a partner at Robin Simon LLP.
Jason holds an LLB degree from the University of Sheffield and a postgraduate
diploma in Legal Practice from the College of Law, Chester. He was admitted
as a solicitor by the Solicitors Regulation Authority in 1991 and is a registered
foreign lawyer with the Law Society of Scotland.
Helen joined the Group in November 2016 as the Group’s Director of Human
Resources. She focuses on developing the Group’s HR team’s business growth,
performance and profitability by aligning the team’s strategic and operational
goals to the Group’s business plans.
Previous experience
Helen has more than 20 years of experience in generalist HR positions across
multiple sectors. Previously, she was the HR director at Princes Limited (2012
to 2016) and, before that, HR consultant at Townhouse Consulting Ltd (2006 to
2012). Helen holds a bachelor’s degree in Business Administration with an HR
Specialism from Teesside University and a Chartered Institute of Personnel and
Development qualification from the Manchester Metropolitan University.
Mark St John Qualter
CEO Managed Services
Zelinda Bennett
Marketing & Client
Development Director
Mark joined the Group in June 2019 as the CEO of our Managed Services
division. He leads our strategy to build a global Managed Services platform.
Previous experience
Prior to joining DWF, he was Head of Artificial Intelligence for RBS Group’s
Commercial and Private Banking business. Mark is also a governor and chairs the
audit committee at the Manchester Metropolitan University. He was previously
a Council Member of the CBI’s Regional Council for Yorkshire and Humberside.
Mark has an MBA from Manchester Business School and a BA (Hons) in Hindi
and Sinhalese from the School of Oriental and African Studies, University
of London. During 18 years within RBS Group plc, Mark held several strategy
and business transformation roles.
Zelinda joined the Group in January 2019 as Marketing and Client Development
Director. She is responsible for shaping our global business development, client
engagement, and marketing strategy, across the UK, Europe, Asia Pacific, the
Middle East, and the USA.
Previous experience
Zelinda has more than 20 years’ experience in law firm marketing and business
development. Previously, she was the International Marketing Director at DLA
Piper (2008 to 2018) and the Marketing Director of Eversheds Sutherland (2005
to 2007). Zelinda holds a bachelor’s degree in French and German Languages
and Literature from Manchester Metropolitan University, a diploma in Marketing
from the Chartered Institute of Marketing and a postgraduate certificate in
marketing management from Manchester Metropolitan University.
Daniel Pollick
Chief Information Officer
Daniel joined the Group in August 2018 as the Group’s Chief Information
Officer. He oversees the strategic and operational application of the Group’s
IT infrastructure, as well as the development of the business’s data strategy
and the Group’s business transformation function.
Previous experience
Previously, he served as DLA Piper LLP’s Chief Information Officer, a position
he held for more than two decades. Daniel has been a Non-Executive Director
on the board of Thongsbridge Tennis Club Ltd since 2015 and holds a degree in
Philosophy, Politics and Economics from the University of Oxford. He is currently
studying for an MSc at the University of Manchester. Daniel has over 30 years
of experience in the IT industry.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 56
Executive Board sponsors - leading by example
on Diversity & Inclusion
Our Executive Board leads by example when
demonstrating our commitment to diversity
across our workforce.
Gender
Age
Helen Hill
Glyn Jones
As lead sponsors, Helen and Glyn are passionate about
this subject, and are considering how we can develop the
confidence and ambitions for our people of all ages, ensure
we are future-proofing our business to embrace the new
generations coming through, and ensure a more exciting than
daunting opportunity for those who have decided to leave
work for a different way of life, by creating the right pre- and
post-departure plans.
Flexible Working
Mark Qualter
Mark leads the initiative to create an environment in DWF
where (a) people have the confidence to come forward,
(b) the business can respond positively and flexibly and
(c) all stakeholders get the right result. Mark sees this as
encouraging people to work differently and more smartly.
Mark believes this approach, when done right, results in
a happier and more productive workforce and helps to attract
and retain the best employees.
LGBT+
Stephen Miles
It is hugely important to us that everyone feels they can be
themselves at DWF. It is an approach that inspires authenticity
at work for all our people – including sexual orientation, gender
identity and gender expression. As the Executive Sponsor
for LGBT+, Stephen has supported our LGBT+ Network in
ensuring our policies and processes are LGBT+ inclusive.
Over the past year, we have celebrated a number of LGBT+
awareness days and profiled LGBT+ role models in the
business. It is important we create opportunities for our people
to tell their stories. We will give continued focus to equipping
colleagues to recognise and challenge LGBT+ discriminatory
behaviour, both in and outside of the office.
Mollie Stoker
Stephen Miles
Achieving a gender balance at senior levels remains one
of the biggest diversity challenges the legal sector faces.
There is a lot of evidence that demonstrates the barriers,
perceived and real, that prevent talented women from
progressing and achieving their full potential.
DWF has made gender balance and equality a priority
business issue and launched business-wide targets, including
a target for women to hold at least 30% senior leadership
positions by 2022.
As the Executive Sponsors, Mollie keeps gender equality at
the forefront of the minds of our Board members, and Stephen
is committed to championing equality of opportunity for our
female colleagues when mapping our divisional pipeline of
talent and succession planning.
Race & Ethnicity
Daniel Pollick
Zelinda Bennett
Our workforce is not currently as representative of the
diversity of our clients, customers and global communities
as we want it to be. Attracting and retaining ethnic minority
talent at every level, and removing barriers, to build
a sustainable talent pipeline, is a priority for the business.
Daniel and Zelinda sponsor the Race & Ethnicity strand, and
continue to have regular and open conversations with our
colleagues about race and culture. They have reinvigorated the
Race & Ethnicity Network, led a reverse-mentoring project to
increase understanding of the experiences of ethnic minority
employees, and support development and progression.
Disability
Chris Stefani
Daniel Pollick
Chris and Daniel want to shift the conversation from
accessibility, to focus on productivity – the social model
of disability identifies that it isn’t the disability holding the
individual back, it’s the environment where they operate.
DWF has achieved Disability Confident Leaders status, and
Chris and Daniel have championed our ongoing commitment
to recruiting from the widest talent pool, and enabling disabled
talent thrive at work. Over the past few years, we have
championed this initiative within our local and business
community, supply chain and networks, to help them
become Disability Confident too.
Mental Health
Jason Ford
Jason is committed to supporting the mental health and
wellbeing of our people, and last year welcomed the
opportunity to become a signatory of the Mindful Business
Charter. Jason oversees the wellbeing strategy that will see
further investment into learning and development on mental
health and peer support.
DWF Group plcAnnual report and financial statements 2020 57
Corporate Governance report
UK Corporate Governance Code
The UK Corporate Governance Code 2018 (the ‘Code’) is the
guidance for our reporting on the financial year ended 30 April
2020. The Board considers that DWF fully complied with the
relevant Code provisions. This Governance section of the Annual
Report, which includes the Directors’ Remuneration report on
pages 73 to 91, the Nomination Committee report on pages 64
to 66, the Audit Committee report on pages 67 to 70, and the
Risk Committee report on pages 71 and 72, together with the
disclosures contained in the Risks section of the Strategic report
on pages 45 to 47, provides details of how the Company applied
the principles and complied with the provisions of the Code
during the year ended 30 April 2020.
Company strategy and values
The Board establishes the Group’s purpose, values and strategy,
and satisfies itself that these and its culture are aligned.
The Board recognises that the Group’s business model and its
governance is key to this.
Transforming legal services
We aim to achieve our strategy by building long-term
relationships with clients, recruiting talented individuals,
maintaining a high-service-level culture, and continually
innovating in the provision of Complex legal services, as well
as Managed and Connected Services that address client needs
and help us increase our market share.
Our values
DWF’s values are at the heart of our culture, providing a clear
foundation for our people and the way we work together:
Always aim higher: By refusing to do only the minimum,
and reaching further every time, we expand the realm of
what’s possible.
Be better together: By supporting each other and working
as a team we can achieve more for our clients and ourselves.
Disrupt to progress: Just because there is an established way
of doing things, it doesn’t mean it is the best way.
Keep all promises: A promise is a promise, no matter how
large or small. By keeping promises, we build trust, loyalty
and commitment.
Attend to details: Paying attention to every last detail is the
right way to ensure that clients experience the very best
of DWF.
These values define our organisation. They guide the Board in
selecting businesses to acquire, and facilitate the integration
of businesses that will contribute to DWF’s ability to achieve
success. They are integral to achieving our strategy, as they
promote a consistent corporate culture among existing and new
employees across our offices. They influence the Board’s actions
and behaviour, complement DWF’s strategic direction, and
support the integration of people who join the business.
COVID-19
In response to COVID-19, our Executive Board invoked the
existing firm-wide Business Continuity Plan along with
the following:
− Developing a Gold/Silver/Bronze command structure,
reflecting a strategic, tactical and operational approach, to
provide governance to decision making and communications,
and to identify lead personnel to manage the response
− Creating a new office response plan and project, to
incorporate workstreams and activity reporting
− Creating a new global COVID-19 policy
− Frequent firm-wide communications, including the creating
and revising of FAQs
− Daily Silver-team calls, and a daily media update to the
Silver team
− Global location-heads meetings to help communicate the new
governance response
You can find further information on the communication with our
people and our clients in relation to COVID-19 on pages 16 to 17
and page 74.
The Board
Leadership and role
The Board provides strategic leadership and relevant oversight,
and currently comprises the Chairman, two Executive Directors,
two Partner Directors and five Independent Non-Executive
Directors. The CEO currently acts as the interim second Partner
Director. It is responsible for the culture of the business together
with ethical standards and values which are intrinsic to a highly
regulated business. The Board is committed to developing
ever-higher standards of corporate governance, as the first legal
business to be admitted to trading on the Main Market of the
London Stock Exchange.
Each of our Executive and Non-Executive Directors brings
relevant experience, independence of judgement and character
to their role. The Independent Non-Executive Directors, in
particular, bring a broad perspective to the deliberations of the
Board, having been selected for their diverse commercial and
sector expertise rather than a legal background.
The Company regards all the Non-Executive Directors
(other than the Partner Directors) as ‘independent’ within
the meaning of the Code, and free from any business or other
relationship that could materially interfere with the exercise
of their independent judgement. They support the development
and strategic direction of the Group, providing critical and
constructive questioning to the Executive Directors through their
participation at the Board, and their knowledge in critical matters
relating to the principal committees on matters of remuneration,
governance, risk and compliance, as well as financial matters
and financial control.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 58
Corporate Governance report continued
Board diversity
The Company recognises the value diversity brings to the
boardroom, and we believe the Board will perform better, and
gain wider support for its overall objectives and strategy, if it
includes the best people available, who also represent a wide
range of backgrounds, skills, experience and views. The Company
has aimed to appoint a diverse Board of highly talented
individuals, including a mixture of gender, ethnicity and social
backgrounds, such that the Board meets the recommendations
of both the Hampton-Alexander and Parker Reviews.
The Nomination Committee recognises the need for
development of a diverse pipeline for succession to senior
management within the business itself. The chart below
shows both the gender diversity of the Board, and the balance
between Executive, Independent Non-Executive Directors and
Partner Directors.
Selection
We believe the selection of Board members for a listed
company should meet the best practice criteria of corporate
governance. When selecting our new Chairman, we undertook
a rigorous process, using Spencer Stuart as external advisors,
to ensure we identified and recruited a Chair with the skills
and expertise needed for a listed legal services business.
Spencer Stuart has no other connection with the Company
or individual directors.
Composition of the Board
The Code recommends that at least half the Board of Directors,
excluding the Chairman, should comprise Independent
Non-Executive Directors. Excluding the Chairman, of the eight
remaining Board members in office on 30 April 2020, five were
Independent Non-Executive Directors.
The Code further recommends that Directors should be
subject to annual re-election. All the current Directors will offer
themselves for re-election at this year’s Annual General Meeting.
In terms of meeting targets for gender balance and ethnicity,
the Company has complied with the target recommendations
of both the Hampton-Alexander Review and the Parker Review.
Diversity targets below Board level, including targets advocated
by the Hampton-Alexander Review, the Parker Review and the
McGregor-Smith Review, are discussed in the Nomination
Committee report on pages 64 to page 66.
Board evaluation
It is the Board’s intention to undertake an external evaluation
of its effectiveness at least every three years. An internal
evaluation of the Board was undertaken during the year.
The evaluation considered the Board as a whole, each Board
Committee and each Director’s own personal self-assessment.
All Board members participated in the evaluation along with
certain other key collaborators, including members of the
Executive Board, the Group’s Internal Audit and finance
functions and the Company’s Auditor and remuneration advisors.
The participants’ responses were provided to the Company
Secretary, and reported on, anonymously.
The main findings of the Board and Committee evaluation
process, together with related actions for the year ending
30 April 2021, are as follows:
Evaluation finding
Action for FY2020/21
Quality of
Information
− Management to further improve the
quality and timeliness of information
provided to the Board and its Committees.
− Annual cycle of business function
presentations, covering the functions’
risks, people and financials, will be added
to the Board rolling agenda.
Director Training
− Further strengthening Director’s
knowledge of the risks the business faces,
for example, through risk appetite training.
As at 30 April 2020
Gender Male
Female
Role
Chairman
Executives*
Non-Executives
Partner Directors
(Non-independent)*
67%
33%
11%
22%
56%
11%
Shareholder
Engagement
* Andrew Leaitherland is considered to be an Executive Director and not
included as a Partner Director for the purposes of this table.
With the exception of the new Chairman, all Non-Executive
Directors have served on the Board of the Company for
between one and two years, while Sir Nigel Knowles, Chris
Stefani and Matthew Doughty have held senior positions within
the business for more than two years.
− The Chair, with the support of the
Company Secretary, will arrange for time
to be set aside for both team and
individual Board members’ development.
The Board should note the development
plans and monitor progress.
− The Chair, alongside the SID, and
Head of Communications, will build
a comprehensive plan to engage
shareholders regularly. The feedback will
inform the Board in developing strategy
which demonstrates commitment
to our shareholders.
Regulation
To comply with certain local regulatory requirements, the
majority of our Executive Board must be lawyers. Our Executive
Board meets this requirement with seven of the twelve
members being lawyers.
DWF Group plcAnnual report and financial statements 2020 59
Division of responsibility
The following table sets out the policy on the division of responsibilities of the Board during the year ended 30 April 2020.
Role
Director
Responsibilities
Chairman
Sir Nigel Knowles*
(a) To chair and set the agenda of all meetings of the Board
(b) To ensure the performance of the Board and management committees
is evaluated regularly
(c) To communicate with shareholders and other stakeholders
Sir Nigel Knowles served as Chair of the Nomination Committee.
Group Chief
Executive Officer
Chief Financial
Officer
Senior Independent
Director
Andrew Leaitherland**
To manage the Group’s operations, including the development of strategic plans.
Chris Stefani
To manage all aspects of the Group’s financial affairs and to contribute to the
management of the Group’s operations.
Chris Sullivan
(a) To act as a sounding board for the Chairman and to serve as an intermediary
for the other directors
(b) To ensure that the Chairman and Group Chief Executive Officer comply with
the policy on division of responsibilities
(c) To be available to shareholders if they have concerns that cannot be or have
not been addressed, or are inappropriate to be addressed through the usual
channels of the Chairman, the Group Chief Executive Officer or the Chief
Financial Officer
Chris Sullivan served on all Board committees.
Independent
Non-Executive
Directors
Tea Colaianni,
Vin Murria, OBE,
Luke Savage,
Samantha Tymms
(a) To constructively challenge and contribute to the development of strategy
(b) To scrutinise management performance against agreed goals and objectives
(c) To ensure financial controls and risk management systems are strong
Partner Director
(Non-Independent,
Non-Executive
Director)
and secure
(d) To take into account the views of shareholders and other key stakeholders
where appropriate
All Independent Non-Executive Directors serve on all Board committees.
Luke Savage served as Chair of the Audit Committee.
Samantha Tymms served as Chair of the Risk Committee.
Tea Colaianni served as Chair of the Remuneration Committee.
Matthew Doughty***
(a) To constructively challenge and contribute to the development of strategy
(b) To scrutinise management performance against agreed goals and objectives
(c) To provide constructive challenge to executive decisions made by the Group
Chief Executive Officer, the Chief Financial Officer and the senior
management team
(d) To take into account the views of shareholders and other stakeholders
where appropriate
(e) To devise and recommend proposals for the Board to have meaningful and
regular dialogue with all of the Group’s partners and employees
*
Sir Nigel Knowles moved from the role of Chairman to Chief Executive Officer on 29 May 2020. He also acted as Interim Partner Director from that date and will
continue to do so until two new Partner Directors are appointed to the Board on 22 October 2020.
** Andrew Leaitherland stepped down as Chief Executive Officer and left the Group on 29 May 2020. He acted as interim Partner Director from March 2020 until
his departure.
*** Matthew Doughty’s role on the Board will change from Partner Director to Executive Director with effect from 22 October 2020 and two new Partner Directors
will be appointed to the Board with effect from the same date.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 60
Corporate Governance report continued
The Board has also established a Disclosure Committee to
address regulatory matters detailed in its Terms of Reference.
All the Directors are members of this Committee. The quorum
for a meeting of the Disclosure Committee is two members.
The Committee meets on an ad-hoc basis to consider and make
decisions on matters relating to inside information concerning
the Company and the Group. The Disclosure Committee is
responsible for ensuring the accurate and timely disclosure
of information to the market, to meet the Company’s obligations
under the Market Abuse Regulation, and to monitor compliance
with the Company’s disclosure controls and procedures.
Operation of the Board
Attendance
The Board and its principal committees meet regularly according
to a schedule of key events in the Company’s corporate
calendar. Ad-hoc meetings are also arranged to consider matters
requiring review and decision outside of the normal schedule.
Six Board meetings were held in the year ended 30 April 2020.
The Board calendar plans for six regular meetings in the year
ending 30 April 2021, and there will be at least four meetings
of each of the Remuneration, Audit and Risk Committee, and
two meetings of the Nomination Committee, during this time.
In addition to the scheduled Board meetings, the Chairman will
meet the Independent Non-Executive Directors without the
other directors present.
Matters reserved to the Board
The Board has a formal schedule of matters specifically
reserved for its decision and approval, which includes:
− approval of the strategic and annual profit plans;
− key announcements including financial statements;
− dividend declarations;
− Board appointments;
− the appointment or removal of the Company Secretary;
− major capital expenditure, acquisitions and disposals;
− material contracts; and
− Treasury policy and other Group policies.
Matters Reserved to the Board and the Board Committees’
Terms of Reference are reviewed annually. You can find them
on the Company’s website dwfgroup/en/investors.
Our unique structure means we also have two Board positions
for Partner Directors, each of whom would serve for an initial
term of up to three years. The Partner Directors have a specific
role which, while similar to that of a Non-Independent, Non-
Executive Director, includes providing constructive challenge
to executive decisions from a standpoint within the business.
They are not entitled to receive a fee for undertaking their role
as Partner Directors but are remunerated as other partners are
from their membership of our Group entities. For the purpose
of the Remuneration report they are treated as Non-Independent,
Non-Executive Directors.
Board committees
The Board has established four principal committees and one
standing committee. The four principal committees are Audit,
Remuneration, Nomination and Risk, the membership of which
is limited to Independent Non-Executive Directors, although
the Chairman also chairs the Nomination Committee and sits on
the Remuneration Committee. All Independent Non-Executive
Directors sit on all four committees. This helps them to
understand all of the information that flows into the committees,
and the rationale for decisions taken by the committees.
Terms of Reference for each of the committees are reviewed
annually. You can find the current Terms of Reference on the
Company’s website dwfgroup/en/investors.
Standing committee
DWF Group plc Board
Disclosure Committee
Standing committee
Audit
Committee
Principal
committee
Risk
Committee
Principal
committee
Nomination
Committee
Principal
committee
Remuneration
Committee
Principal
committee
DWF Group plcAnnual report and financial statements 2020 61
Board and Committee meeting attendance for the year ended 30 April 2020
Directors
Sir Nigel Knowles*
Position
Chairman
Chris Sullivan
Senior Independent Director
Andrew Leaitherland**
Group Chief Executive Officer
Chris Stefani
Chief Financial Officer
Matthew Doughty
Partner Director
Tea Colaianni
Vin Murria, OBE
Luke Savage
Non-Executive Director
Non-Executive Director
Non-Executive Director
Samantha Tymms
Non-Executive Director
Board
meetings
Audit
Committee
Nomination
Committee
Remuneration
Committee
Risk
Committee
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
–
4/4
–
–
–
4/4
4/4
4/4
4/4
3/3
3/3
–
–
–
3/3
3/3
3/3
3/3
3/4
4/4
–
–
–
4/4
4/4
4/4
4/4
–
4/4
–
–
–
4/4
4/4
4/4
4/4
* Sir Nigel Knowles moved from the role of Chairman to Group Chief Executive Officer on 29 May 2020. Sir Nigel Knowles was unable to attend the Remuneration
Committee meeting held on 29 July 2019 due to an unavoidable diary commitment.
** Andrew Leaitherland stepped down as Group Chief Executive Officer and left the Group on 29 May 2020.
All meetings are structured to allow open discussion. The minutes of the Board and committee meetings are circulated to all Directors
after each meeting. Details of the Board’s activities during the year are set out below. If a Director is unable to attend a meeting, they still
receive related papers in advance of the scheduled meeting and any input they provide is considered fully.
Main topics discussed by the Board during the year
Regular updates
Business performance
CEO report
CFO report
Group General Counsel and
Company Secretary’s report
HSE report
Financial matters
Annual reporting
Budgeting
Dividends
Group financing
Operational performance
Governance and
stakeholders
Investor relations
Review of Board and
Committee effectiveness
Stakeholder engagement
Regulatory
EHS regulation and standards
Listing Rules
Market Abuse Regulation
Strategy
Performance strategy
M&A and integration
People strategy
Talent development and
succession planning
Culture
Engagement
Risk management
Brexit risks
Diversity and inclusion
Competition law risks
Mentoring
COVID-19
Pulse Survey results
Training and development
Values
Cyber and information
security risks
Fraud and financial crime
risk procedures
Risk framework
and taxonomy
Remuneration
Appointment of
remuneration advisors
Gender pay gap reporting
Executive remuneration
Share plans and awards
Decision-making relating to
leaver status
Workforce remuneration
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 62
Corporate Governance report continued
Board and committee support
The Company has systems to ensure the Board is supplied
with appropriate and timely information that helps Board
members discharge their duties. We have introduced a fully
encrypted electronic Board portal to distribute Board and
Committee papers, and this also enables the efficient
distribution of business updates and other resources to the
Board. Board members may request additional information
or variations to regular reporting as required.
The Company Secretary is responsible to the Chairman for
advising the Board on all governance matters. All directors also
have access to the advice and services of the Group General
Counsel and Company Secretary. A procedure exists for Board
members to seek other independent professional advice in the
furtherance of their duties, if required.
Board members are also provided with sufficient resources
to undertake their duties in relation to Board committees.
They have access to the Group General Counsel and Company
Secretary (who acts as secretary to all Board committees) and
all other partners and colleagues. They are also able to take
independent legal and professional advice when they believe
it is necessary to do so.
We have developed an induction process for new Directors,
which will be available for all new members joining the Board.
The Company provides the necessary resources for developing
and updating Directors’ knowledge and capabilities.
A combination of internal and external training, and tailored
Board and committee sessions including briefing sessions, is
available to help Directors continually update their skills, and the
knowledge and familiarity with the Company they need to fulfil
their role as Board and committee members.
Culture
The Board understands that listening to our employees is key.
We have put in a great deal of effort over the last few years to
ensure engagement of our people gets the focus and time it
needs, and in doing so, creates the impact we want. This effort
includes a range of communications and engagement tools,
such as Pulse Surveys, to involve our people and to share
messages and information on people engagement, highlighting
that the Company is listening to and addressing their needs.
You can find more information on DWF’s Engaging People
Executive and Employee Forum in the Sustainability report
on pages 37 to 40.
Pulse Surveys
In 2019, we moved away from traditional annual surveys to
a more frequent digital platform that helps leaders and line
managers create plans, focusing on the improvements that
matter the most to our people.
Employee voice
Under the Code, boards are required to engage with the wider
workforce to enhance the ‘employee voice’ in the boardroom.
Our Senior Independent Director, Chris Sullivan, has worked
with an advisory panel in the business to provide this voice.
Chris attends Engaging People Executive meetings, has met with
partners and employees across our international locations both
formally and informally, engaged with the Diversity & Inclusion
Leadership Group and meets with the business directly through
briefings at key points during the year. The Board has also set
workforce policies consistent with our values and our strategy
for long-term sustainable success, with engagement a top
priority. Two-way communication is filtered through management
layers and we also hold ‘town hall’ meetings led by our Group
Chief Executive Officer. In addition, the Partner Directors are
appointed from among our partners, who as a group form part
of our workforce. The Partner Directors therefore represent
the views of our partners in the boardroom and consult with
partners in the business on a regular basis. Further details on
communication and engagement with employees and partners
is disclosed on pages 37 to 40 and page 86.
Understanding the financial and economic environment
To ensure our people are aware of the financial and economic
factors affecting the performance of the Company, the Board
and Executive Board ensure they communicate messages
on our trading and key financial metrics to all our people
clearly and frequently. Our people receive training and mentoring
on financial awareness and this is also part of our career
management process and DWF’s Behaviours Framework,
which applies to all our partners and employees.
Our people as shareholders
We encourage employees who are eligible, to become involved
in the Group’s performance through participation in share
schemes, further details of which you can find on page 85.
All UK employees have the opportunity to buy shares in the
Company, as part of our Buy-As-You-Earn (‘BAYE’) plan.
Employee policies
The Board values two-way communication between senior
management and employees on all aspects of the Company’s
strategy, Company performance, management effectiveness
and approach to wellbeing. We have developed an internal
communications strategy that includes regular management
roadshows, virtual strategy briefings, visits to operational units,
responses to a regular employee opinion survey, and updates
on performance. Our internal communications channels also
include face-to-face events and a corporate intranet.
Throughout the Group, the principles of equal opportunities are
recognised in the formulation and development of employment
policies. We were the first legal business to be awarded and
to maintain Disability Confident Leadership status for removing
barriers to disabled talent in the workplace. It is the Company’s
policy to give full and fair consideration to applications from
people with disabilities, having regard to their particular
aptitudes and abilities. If an employee becomes disabled,
the Company’s objective is to continue to provide suitable
employment in the same or an alternative position, with
appropriate adjustments made if necessary. Employees with
disabilities share equally in the opportunities for training,
career development and promotion.
Diversity and inclusion
Diversity in leadership
The Board is committed to maintaining its current gender
diversity, with no fewer than three women on the Board at the
end of FY2019/20. We are targeting female representation on
the Executive Board to be at least 33%, and for women to hold
at least 30% of senior leadership positions by 2022.
DWF Group plcAnnual report and financial statements 2020 63
The percentage of female representation within the business
is shown below:
As at 30 April 2020
Gender
Board
Executive Board
Senior leadership*
All employees
Male
67%
75%
74%
42%
Female
33%
25%
26%
58%
* Senior leadership comprises partners and directors at Career Levels 1 to 3.
We have a target to achieve at least 10% BAME representation
across senior leadership positions by 2022, and the Board plans
to initiate BAME pay gap reporting by the end of 2020.
You can find more information on DWF’s Diversity & Inclusion
strategy, benchmarking and targets, together with information
on its Global Diversity & Inclusion Leadership Group, in the
Sustainability report on pages 37 to 40.
Black Lives Matter
The Group was also active in response to the Black Lives Matter
movement by starting conversations on its internal social media
platforms and having listening sessions at all of its locations.
The CEO also made an external statement in expression of
support, and to set out what the Group is doing in response.
Such activity includes expansion of a successful reverse-
mentoring scheme with senior management, set up during the
year ending 30 April 2020, and also using succession planning
and appointment processes in the scope of the Board’s
Nomination Committee.
Emerging and principal risks
The Board has completed a thorough assessment of the
Company’s emerging and principal risks. Please see pages 45
to 47 of the Strategic report.
Risk management and internal control assessment
The Board has ultimate responsibility for the Group’s risk
management and internal control. In accordance with Provision
29 of the Code, the Board is responsible for evaluating the
effectiveness of risk-management and control systems,
ensuring that:
− there is an ongoing systematic process for identifying,
evaluating and managing the emerging and principal risks
faced by the Company;
− this system has been in place for the current financial year;
− the Board reviews this system continually; and
− the system accords with the FRC guidance on risk
management, internal control and related financial and
business reporting.
The Board has directly, or through delegated authority to the
Risk and Audit Committees, overseen and reviewed the
development and performance of risk-management activities,
practices and internal control systems in the Group.
Further details are contained in the Risk and Audit Committee
reports at pages 67 to 72.
Regulation in England and Wales
Unlike the majority of listed companies, that have to comply
with the Code, as a legal business we also have to comply with
the regulation of the Solicitors Regulation Authority (‘SRA’) in
England and Wales and take account of regulations imposed by
other relevant legal regulatory bodies in every country we work
in. In particular, that regulatory framework has led to an unusual
structure to our Executive Board and to the structure of the
Group, as well as to certain restrictions on shareholding.
In addition to the standard requirements of good governance,
the applicable regulatory regime imposes three major
requirements on the business. The first is that the majority
of executive management responsible for the day-to-day running
of a legal business must be lawyers. Our business is managed
by an Executive Board (see pages 54 and 55) and a majority of
its members are lawyers.
The second requirement is a restriction on the holding of certain
interests in an SRA-licensed entity, including holdings of 10%
or more of the voting rights by a non-authorised person, unless
such person has the prior approval of the SRA. If someone does
acquire such a holding and is not authorised to do so, then the
Company’s Articles of Association entitle the Company to
impose certain restrictions on all of that person’s shareholding,
which may include disenfranchisement or compulsory disposal
of such shares. Further details are set out in the Directors’ report
on pages 94 and 95.
The third requirement is set out in the Company’s Articles of
Association and certain other Group constitutional documents.
The Company and the Directors must ensure that appropriate
systems are implemented and maintained to enable the
provision of legal services by the Group and our people, in
accordance with the professional duties of legal practitioners in
each jurisdiction in which they practise. To the extent that there
is any conflict, or potential conflict, between (i) the Company’s
and the Directors’ statutory and other duties at law and under
the Articles of Association of the Company to shareholders and
(ii) the professional duties of our people and our Group entities,
then those professional duties will prevail.
Relations with shareholders
The Board is committed to open and transparent dialogue with
shareholders. The Chairman, Senior Independent Director and
other Non-Executive Directors are available to meet with major
shareholders on request. You can find further information in
relation to our communications with shareholders on pages 16
and 74.
Our second Annual General Meeting as a public company will
be held on 21 October 2020. This will be an opportunity for
further shareholder engagement, and for the Chairman to
explain the Company’s progress and, with other members
of the Board, to answer any questions.
All Directors will attend the AGM, unless illness or pressing
commitments prevent them from doing so. Full details of our
2020 AGM are set out in the accompanying Notice of AGM
(which is also available on dwfgroup.com/en/investors).
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 64
Nomination Committee report
Nomination Committee members
During FY2019/20, Sir Nigel Knowles chaired the Committee
and was also the Chairman of the Board during that time.
The Committee is made up of a minimum of three members,
a majority of whom are Independent Non-Executive Directors,
in accordance with the requirements of the Code. The members
of the Committee are listed in the table below. The expertise
and experience of each of the members is set out in their
biographies on pages 52 and 53. Mollie Stoker is appointed
as secretary to the Committee.
Other regular attendees are the CEO, CFO and the Partner
Director, and other senior managers as appropriate, to ensure
the Committee can better understand the views of the executive
management when making its decisions and recommendations,
especially on succession planning matters.
Nomination Committee meetings
The Committee meets as required, with a minimum of two
meetings a year. The Committee met three times during
FY2019/20 and the table below provides details of members’
attendance at those meetings. In relation to the meeting
scheduled for March 2020, papers were circulated to the
Committee members and reviewed by them before the
meeting. However, due to the impact of COVID-19 and the
related lockdown, the Committee Members and Board made
the decision to postpone the majority of the agenda from this
meeting to other meetings scheduled during FY2020/21, to
ensure the main focus of Board activities at that critical moment
related to how the business should manage the impact of
COVID-19 and the lockdown.
Following each Committee meeting, the Chair provides
a summary of the Committee’s activity to the next
Board meeting.
Attendance at Nomination Committee meetings
held during the period to 30 April 2020
Directors as at 30 April
Sir Nigel Knowles (Chair)
Samantha Tymms
Tea Colaianni
Vinodka Murria
Luke Savage
Chris Sullivan
Number
of meetings
eligible to attend
Number
of meetings
attended
3
3
3
3
3
3
3
3
3
3
3
3
Jonathan Bloomer
Chair, Nomination Committee
Dear shareholder,
During this first full year in operation, the Committee reviewed
the appointment of the second Partner Director and the process
to be used in relation to such an appointment. In addition, despite
all the Independent Non-Executive Directors being relatively
new appointments to the Board, as part of the IPO process,
the Committee began a review of the approach to succession
planning for both the Board and for senior management,
recognising its importance. The Committee, together with the
Board, also ensured it has oversight of diversity and inclusion,
and appraised the Group’s diversity-related commitments.
After the year end, in May 2020, Andrew Leaitherland stepped
down from his position as CEO and Executive Director, and was
replaced by Sir Nigel Knowles. Chris Sullivan stepped up as Interim
Chair while this Committee undertook a formal and rigorous
process to appoint a new Chair of the Board. On 1 August 2020,
I was appointed Chairman of the Board to replace Sir Nigel
Knowles in this role and as Chair of this Committee, and Chris
Sullivan became Deputy Chair on the same date, alongside his
existing role as Senior Independent Director. The Committee
ensured we followed a formal, rigorous and transparent procedure
for making these recommendations. The Committee also ran the
process to recommend the appointment of two new Partner
Directors, Seema Bains and Michele Cicchetti, who will take up
their new positions on 22 October 2020, and at the same time
recommended the change for Matthew Doughty in the position
on the Board as Partner Director to Executive Director, to reflect
his new role as Chief Operating Officer for the Group, also with
effect from 22 October 2020.
The standard process the Committee uses for all Board
appointments involves an external search firm identifying candidates
outside the Group, and also considers internal candidates.
For Partner Director positions, an external search firm is not used
and only internal candidates are considered. We undertake
detailed assessments of short-listed candidates, followed by
interviews with Committee members and other Directors as
required. The Committee also takes references before it makes
any of its recommendations of appointments to the Board.
Jonathan Bloomer
Chair, Nomination Committee
DWF Group plcAnnual report and financial statements 2020 65
The role of the Nomination Committee
The main duties of the Nomination Committee are to:
− regularly review the structure, size and composition of the
Board of the Company and to make recommendations to
the Board regarding any changes it considers necessary
− keep under review the leadership needs of the Company
and make recommendations regarding the formulation
of succession plans for appointments to the Board, to
maintain an appropriate balance of skills, experience and
independence, as well as diversity
− lead the process for Board appointments and make
recommendations to the Board on such matters.
The Committee is also responsible for:
− assisting with any evaluation process to assess the overall
and individual performance of the Board and its committees
− reviewing the Group’s approach to diversity and inclusion,
as aligned with its policies on diversity, and progress under
the same
− monitoring the implementation of the Code within the Group,
as well as reviewing changes to the corporate governance
policies and practices within the Group.
Full details about the structure and role of the Committee are
contained in its Terms of Reference, available on the Group’s
website at dwfgroup.com/en/investors.
Key activities during FY2019/20
The Committee discharged its responsibilities during FY2019/20
as follows:
Appointment of Partner Directors
Matthew Doughty has held the position of Partner Director since
IPO. There is a requirement under the Articles of Association
of the Company that for so long as the partners, in aggregate,
hold at least 25% or more of the voting rights, the Board shall
appoint two Partner Directors. Each must meet the selection
criteria set by the Nomination Committee for a person to be
eligible for recommendation as a Director by the Nomination
Committee. The requirement, as set out in the Articles of
Association of the Company, was to appoint someone who is
both a member of DWF Law LLP and a shareholder of DWF
Group plc on or before 10 March 2020, being within 12 months
of the date of adoption of the Articles of Association.
The Nomination Committee discussed in depth the appointment
of the second Partner Director at its meetings held during
FY2019/20. The time limit in the Articles of Association was
noted by the Committee, but the Committee also recognised
that due to the acquisition activity the Group was undertaking
during FY2019/20, the composition of the Group was
changing considerably, especially in the International division.
The Committee agreed it would be appropriate for the second
Partner Director to reflect the increasingly global nature of the
business and be appointed from a candidate pool made up of
senior partners in the International division. However, it was also
noted that it would be appropriate for this decision to be made
at a later date, once certain acquisition activities were complete,
or had been integrated.
Therefore, the Nomination Committee recommended, and
the Board approved, that as Andrew Leaitherland was already
a Director on the Board but also a member of DWF Law LLP
and a shareholder, he could stand in as the interim second
Partner Director until a time when it would be appropriate to
commence a selection process to find a suitable international
candidate. On Andrew’s departure from the business in May
2020, the Nomination Committee recommended to the Board,
and the Board approved, that Sir Nigel Knowles would take
on this interim position as he was also a Director on the Board,
a member of DWF Law LLP and a shareholder.
The process started in June, and as Matthew Doughty will
be changing his position on the Board as Partner Director to
Executive Director to reflect his new role as Chief Operating
Officer for the Group, a process was also started in July to find
a suitable replacement for him as Partner Director from our
senior partners in the UK and Ireland. At the date of this report
we have been successful in recruiting two new Partner
Directors, Seema Bains and Michele Cicchetti, who will be
appointed on 22 October 2020.
Board evaluation
The Committee supported an internally facilitated
comprehensive Board evaluation led by the Chair, with
support from the Company Secretary, which focused on the
performance of the Board, its Committees and its individual
Directors. More detail on the Board evaluation process is set
out in the Corporate Governance section on page 58.
As part of the evaluation, the Committee noted that it had been
decided for the initial period following the IPO that all
Independent Non-Executive Directors should sit on all the
Committees. It was acknowledged that this had enabled
each of the Independent Non-Executive Directors to get
a comprehensive view of the Group as a result. The evaluation
carried out identified that the Audit Committee Chair should be
on the Risk Committee and vice versa, that there should be
ideally two, but at least one, other Independent Non-Executive
Director on each Committee. It was agreed that further
discussion about membership of each Committee should
take place during FY2020/21.
The findings identified by the FY2019/20 internal evaluation
include:
− Quality of Board papers – management should ensure that the
Risk Committee receives adequate information on risks that
might affect reputation or performance and that information
presented is appropriately balanced between the provision
of relevant analysis and not unnecessarily voluminous
− Board training – further training would be beneficial for each
of the Committees, including in respect of risks the Group
faces, for example risk appetite training
− Shareholder engagement – The Chair and the Senior
Independent Director (and other Directors as appropriate)
should maintain sufficient contact with shareholders to
understand their concerns and ensure that the views of the
shareholders are communicated to the Board as a whole.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 66
Nomination Committee report continued
Diversity
The Board and the Committee reviewed the Group’s current
Diversity & Inclusion strategy, which sets out how to make
diversity and inclusion part of the way DWF does business,
and the transformational milestones achieved. The Committee
is proud of the progress made.
Succession planning
The Committee made a decision to begin a review of its
approach to succession planning for both the Board and
senior management, despite the Independent Non-Executive
Directors being relatively new, having joined the Board as
part of the IPO process.
Diversity was actively considered by the Committee in all
discussions relating to appointments and succession-
planning matters.
In July 2019, the Board approved the Group’s diversity policy and
the following agreed targets relating to diversity for the Board,
Executive Board and senior leadership positions. The Committee
and Board continue to monitor progress towards them:
1. The Board to maintain its current gender diversity with no
fewer than three women on the Board.
2. Female representation on the Executive Board to be raised
to at least 33% by 2022.
3. Women to hold at least 30% of senior leadership positions,
with each operating division being able to set its own targets
for gender diversity in its senior leadership positions.
4. Target to achieve at least 10% BAME representation across
senior leadership positions by 2022.
5. The Board to initiate BAME pay gap reporting by the end
of 2020.
For meeting targets for gender balance and ethnicity, for the
year ended 30 April 2020, the Company has complied with
the target recommendations of both the Hampton Alexander
Review and the Parker Review, with three female directors
out of nine on the Board, and has ethnically diverse directors.
However, we recognise that diversity targets below the level
of the Board, including those of the Hampton-Alexander review,
the Parker review and the McGregor-Smith Review, are as
important as the targets at Board level, if not more so.
The Nomination Committee recognises the need for developing
a diverse pipeline for the succession to senior management
within the business itself.
The Nomination Committee and the Board have made
a policy commitment that all appointments to the Board
are made on merit, in the context of the skills, experience,
independence and knowledge that the Board as a whole
requires to be effective. However, there is a broad consensus
that increasing diversity in the boardroom and in senior
leadership encourages new and innovative thinking, maximises
the use of talent, and leads to better business decisions
and governance.
At DWF, we share an ambition, common with other progressive
businesses, to improve diversity on our Board, Executive Board
and across our wider senior leadership. Achieving our diversity
goals will make a significant contribution to our inclusion
agenda, help maintain a competitive advantage, and enable our
people to operate in a way that maximises their contribution to
our business. Please see pages 37 and 38 in the Strategic report
for more information on the Group’s Diversity & Inclusion
strategy and actions during the year.
A detailed paper was submitted to, and reviewed by, the
Committee in late March 2020, although the Committee decided
that the detailed discussion on its contents and proposed
actions arising should take place during FY2020/21, particularly
given the recent changes in Directors on the Board.
The Directors have also undertaken a skills assessment,
and the results of this helped inform the appointment process
for the new Chair and Partner Directors.
Corporate governance
The corporate governance framework for DWF was up
to date at IPO and processes were in place to ensure
compliance at that point. The Committee worked with the
Internal Audit team to ensure a risk assessment of the corporate
governance framework was taken during FY2019/20. As a result,
it was agreed that while processes were in place, it was still
a relatively new framework and would be reviewed more
comprehensively during FY2020/21.
Nevertheless, recent corporate governance developments,
their implications and associated actions, were picked up by
the Board and the other committees throughout FY2019/20 and
those actions were taken as a result. For example, on IPO DWF
had introduced a post-cessation shareholding requirement for
its Executive Directors of 50% of the pre-cessation holding
requirement (or actual shareholding, if lower) for two years from
their leaving date. However, during the year, and in order to
respond to the latest Investment Association’s Remuneration
Guidelines, the Remuneration Committee agreed that it would
approve the decision to go beyond the existing policy and would
operate the extended requirement of 100% of the pre-cessation
holding requirement (or actual shareholding if lower) for 2 years
post-cessation.
Areas of focus for FY2020/21
During FY2020/21, the Committee has already, or will,
focus on:
− the appointment and induction of the new Chair
− the appointment and induction of the Partner Directors
− continuing its ongoing assessment of the configuration
of the Board, its committees and its succession planning,
and the succession planning for senior management
− continuing its ongoing assessment of progress under
the diversity and inclusion policy and towards the
agreed diversity targets
− reviewing compliance with the Code.
DWF Group plcAnnual report and financial statements 2020 67
Audit Committee members
The Committee is chaired by Luke Savage. The Committee is
made up of a minimum of three members, each an Independent
Non-Executive Director. The members during the year are listed
in the table below. The Chair of the Board is not a member of
the Committee but may attend its meeting by invitation. For the
purposes of the Code, Luke Savage qualifies as a person with
recent and relevant financial experience. Each members’
expertise and experience is set out in their biography on
pages 52 and 53. Mollie Stoker is appointed as Secretary to
the Committee.
Audit Committee meetings
The Committee meets at least three times a year, to coincide
with key dates in the financial reporting and audit cycle, and
otherwise as the Chair requires. To enable it to carry out its
responsibilities, the Committee has an annual rolling agenda
maintained by the Company Secretary, and regularly reviewed
in conjunction with management. The Company Secretary
also maintains a tracker of actions arising from meetings.
This ensures that the agenda for each meeting aligns with both
the financial reporting and audit cycle, as well as particular
matters arising throughout the year considered appropriate
by the Committee for its scrutiny. At the next scheduled Board
meeting, the Chair of the Committee reports formally to the
Board on the proceedings of the Committee, including how
it has discharged its responsibilities.
The Committee held four scheduled meetings during FY2019/20
and the table below provides details of members’ attendance at
those meetings. At the invitation of the Chair of the Committee,
other regular attendees, who can withdraw as necessary,
included at some or all of the meetings: representatives of the
Auditor, the Chairman, the Chief Executive Officer, the Chief
Financial Officer, the Deputy CFO, the Group Risk Director, the
Head of Internal Audit, the Partner Director and the Deputy
Company Secretary. The Committee also meets privately with
representatives of the Auditor, and the Head of Internal Audit.
Attendance at Committee meetings
held during the period to 30 April 2020
Directors as at 30 April
Luke Savage (Chair)
Tea Colaianni
Vinodka Murria
Samantha Tymms
Chris Sullivan
Number
of meetings
eligible to attend
Number
of meetings
attended
4
4
4
4
4
4
4
4
4
4
Audit Committee report
Luke Savage
Chair, Audit Committee
Dear shareholder,
The Audit Committee has now been established for over a year
since listing. Its role is to monitor the integrity of the Group’s
financial reporting, assess the effectiveness of internal control
processes, oversee the work and quality of the Group’s Internal
Audit function, and monitor the quality of audit provided by the
Auditor, Deloitte LLP, with particular regard to its effectiveness,
objectivity and independence.
To assist with this, the Committee has worked throughout the
year with management, including the Chief Financial Officer,
Deputy Chief Financial Officer, Group Director of Risk and Head
of Internal Audit, as well as with representatives of the Auditor.
These individuals are invited to attend all Committee meetings
to raise questions, and so the Committee can provide them with
an independent perspective on relevant matters.
Committee meetings follow a rolling agenda, providing for
effective management of matters, and focused discussions.
The agenda covers a number of recurring items, including
updates from the Head of Internal Audit, tax matters and
evaluations of relevant Company policies, such as the
whistleblowing and financial risk management policies.
As well as these matters, during the year ended 30 April 2020,
the Committee addressed a number of special matters.
These included evaluating the operating model for finance
and financial control across the Group’s international divisions,
assessing the first year of application of the new accounting
standard IFRS 16 in respect of Leases, the development
of a finance roadmap for the Group, taking into account the
Solicitors Regulatory Authority accounting rules, and assessing
the Group’s revenue and work in progress in line with IFRS 15.
As chair of the Audit Committee, I am pleased to present this
report for the year ended 30 April 2020. If you would like to
ask any questions about our work during the year at the AGM,
please see the notes to the notice of AGM which sets out the
arrangements for this year.
Luke Savage
Chair, Audit Committee
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 68
Audit Committee report continued
The role of the Audit Committee
The Committee’s main responsibilities include:
Financial reporting:
− reviewing the integrity of the financial statements, including
annual reports and half-year reports
− reviewing and discussing judgements on accounting
principles and disclosure rules with Company management
− advising whether the Annual Report is fair, balanced
and understandable
Risk and control:
− evaluating the effectiveness of the Group’s risk management
and internal control processes
− overseeing compliance with applicable legal and
regulatory requirements, including monitoring ethics and
compliance risks
Internal audit:
− approving the annual internal audit plan, ensuring appropriate
focus on DWF’s internal control environment, strategic
priorities and principal risks
− receiving regular reports on the result of the work of
internal audit
− evaluating the Internal Auditor’s effectiveness
External audit:
− monitoring the quality of audit provided by the Auditor
− reviewing the scope of the audit and non-audit work
undertaken by the Auditor
− recommending the appointment or reappointment of
the Auditor
Compliance:
− assessing the effectiveness of the Group’s processes for
Internal controls and risk management:
− reviewing the adequacy and effectiveness of internal controls,
financial reporting and risk management, working with the
Risk Committee to assess the scope and effectiveness of the
systems established to identify, assess, manage and monitor
financial and non-financial risks
− monitoring the integrity and effectiveness of the Company’s
internal financial controls by reference to:
• summaries of business risks and mitigation controls
• regular reports and presentations from the Group Risk
Director and the Head of Internal Audit as well as the
Auditor
− evaluating the operating model for finance and financial
control across the Group’s international divisions
− developing a finance roadmap for the Group taking into
account the Solicitors Regulatory Authority’s accounting rules
Internal audit:
− approving the Internal Audit plan
− reviewing the work of the Internal Audit function
− monitoring management’s responsiveness to findings from
internal audit work
− approving the appointment of the Head of Internal Audit
− reviewing the role, resources and effectiveness of the
Internal Audit function including access to appropriate skills
and expertise
External audit:
− reviewing the Auditor, its terms of engagement, the findings
of its work and, at the end of the audit process, reviewing its
effectiveness
− reviewing the quantity of non-audit services provided by
compliance with laws and regulations
the Auditor
− assessing the independence and objectivity of the Auditor
Compliance:
− reviewing and updating the Group Whistleblowing Policy
− reviewing and approving any necessary updates to the
Non-Audit Services Policy
− discussing and monitoring compliance with applicable external
legal and regulatory requirements.
Full details about the structure and role of the Committee are
contained in its Terms of Reference, which are available on the
Group’s website at dwfgroup.com/en/investors.
Key activities during FY2019/20
The Committee discharged its responsibilities during
FY2019/20 through:
Financial reporting:
− assessing the first year of application of the new accounting
standard IFRS 16 Leases
− assessing the Company’s revenue and work in progress in line
with IFRS 15
− assessing the cash controls
− recommending the payment of dividends
− assessing the acquisition accounting
− reviewing the Annual Report and Accounts to ensure they are
fair, balanced and understandable
− considering the integrity of the half-yearly financial statements
DWF Group plcAnnual report and financial statements 2020 69
Fair, balanced and understandable
We advised the Board that we supported the statement that
this Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
External Auditor
The Company’s Auditor, Deloitte LLP was appointed by the
directors of DWF Group plc to act as reporting accountant and
tax advisors in preparing the IPO and was subsequently
reappointed to undertake the annual audit for the financial year
ending 30 April 2019. Their involvement as Auditor to parts of the
Group dates back more than 13 years (as Auditor to DWF LLP),
and their original appointment came as a result of a competitive
tender process. They were reappointed as our Auditor at the
AGM held in September 2019, and the intention, as reported in
last year’s annual report and accounts, was that we would be
undertaking a competitive tender process to appoint an Auditor
during 2020, for the audit of the year ending April 2021.
Work was underway in relation to this tender process at the
start of the calendar year, but the timing of COVID-19 affected
our ability to run an effective tender process.
The Committee therefore recommended to the Board that,
to ensure we undertake an effective audit tender process,
this audit tender process be delayed for a year so it takes place
before the audit for the year ending April 2022.
The Committee assesses the quality and effectiveness of the
Auditor on an ongoing basis, having particular regard to:
− the value of the Auditor’s understanding and insights into the
Group’s business
− its independence and objectivity
− how it approached key areas of judgement, the extent
of challenge and the quality of reporting
− feedback from management based on their interaction with
the Auditor.
The Committee is satisfied that the audit, as carried out by
Deloitte, is effective and provides an appropriate, independent
and objective challenge to management’s thinking.
The Committee has also considered the Company’s policy
on the engagement of the Auditor for the provision of non-audit
services. It sets out rigorous controls intended to ensure the
independence of the Auditor is not impaired, and takes into
account the changes required by the EU Audit Regulation and
Directive (the ‘Audit Regulation’) and FRC’s Ethical Standard.
The policy stipulates:
1. the nature of non-audit services the Auditor is not permitted
to perform;
2. levels of authority for the Executive to engage the Auditor for
approved non-audit services; and
3. that any non-audit services to be provided by the Auditor
must be approved in advance by the Committee. For a single
permitted project where the fee is no more than £30,000
the non-audit services are considered trivial for the purposes
of the Audit Regulation, and can instead be approved by
the Chief Financial Officer (or Chief Executive Officer in
his absence).
As a result of this policy, and to avoid conflict with its role as
Auditor, Deloitte LLP, does not act as Remuneration Advisors to
the Company. The Committee also had regard to the Company
policy in relation to the recruitment of people from the Auditor,
again to manage any potential conflicts of interest.
The audit fees payable to Deloitte for the year ended 30 April
2020 were £448,850 and non-audit service fees incurred were
£42,328, the latter being incurred for tax advisory work in
Australia (relating to the year ended 30 April 2019).
This equates to a non-audit to audit fee ratio of 10%.
We continue to take steps to ensure the level of non-audit fees
is compliant with our 50% non-audit fee cap rule (noting that
this cap excludes fees payable for non-audit work required to be
carried out by Deloitte by law or regulation or arising from any
assessment of the Group’s compliance with the Solicitors
Accounts Rules). The Group paid fees of £118,100 to Deloitte for
such work for the year ended 30 April 2020.
Peter Saunders is the Statutory Auditor who signs the
Independent Auditor’s report to the members of DWF Group plc
for and on behalf of Deloitte LLP. Peter has held this role for
three years.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 70
Audit Committee report continued
Internal Audit
The Group’s Internal Audit function provides independent
assurance over the management of the areas of greatest
risk to the Group, and key aspects of DWF’s internal control
framework. The annual plan is approved by Audit Committee
and is determined by a comprehensive risk assessment
involving senior management.
Committee effectiveness
An evaluation of the Committee’s effectiveness took place
during the year, as part of the Board effectiveness review.
Overall, the review concluded that it has continued to act in
accordance with its Terms of Reference, management was held
accountable for its areas of responsibility, and Deloitte provided
an effective audit.
Audit Committee priorities for year ending
30 April 2021
Looking ahead to the year ending 30 April 2021, the
Committee expects to:
− continue its ongoing assessment of the internal and
external audit function
− undertake an audit tender process for a new auditor to be
appointed for the audit for the year ending 30 April 2022
− continue to focus on the activities laid out in the financial
roadmap for the Group
− continue to focus on effective integration of acquisitions
into the Group’s control environment
− review the outputs from the agreed internal audit
focus areas.
The Committee receives reports on the outcomes of Internal
Audit’s work at each scheduled meeting, and the Committee
closely monitors management’s response to actions identified
in the reports.
The Head of Internal Audit has direct access to, and has regular
meetings with, the Audit Committee Chair, and attends the
Committee meetings. In addition, the Internal Audit function
has unrestricted access to employees and documentation
across the Group, to enable it to perform its duties.
The Committee has approved Internal Audit’s Terms of
Reference and the scope of its work continues to evolve,
taking into account changes within the Group’s business, as
well as emerging best practice. The Committee also reviewed
the internal audit activity against good practice as set out in
the recent Institute of Internal Audit’s Code of Practice.
During the year, the Committee approved the appointment
of the Group’s first Head of Internal Audit, and the resourcing
of the annual plan, including co-source arrangements to enable
the function to commission the support of technical experts
and additional support where required.
The Committee intends to conduct an assessment of the
function during the year ending 30 April 2021, to consider
its effectiveness.
Accounting and key areas of judgement
The main areas considered by the Committee in relation to the
period to 30 April 2020 are set out below:
− Revenue recognition: valuation of unbilled revenue
− Adequacy of the provision for bad and doubtful debts on
trade receivables
− Control environment regarding cash and cash equivalents
− Accounting for acquisitions
Consideration was given to management papers and reports,
in conjunction with the external auditors report and work
performed, in arriving at the outcome as recorded and disclosed
in the financial statements.
DWF Group plcAnnual report and financial statements 2020 71
Risk Committee members
The Committee is chaired by Samantha Tymms. It is made up
of a minimum of three members, and each is an Independent
Non-Executive Director. The members of the Committee during
the year are listed in the table below. The Chair of the Board
is not a member but may attend its meeting by invitation.
Members of the Committee have experience of risk
management issues and practices. Each members’ expertise
and experience is set out in their biography on pages 52 and 53.
Mollie Stoker is appointed as Secretary to the Committee.
Risk Committee meetings
The Committee meets at least three times a year, to coincide
with key dates in the financial reporting and audit cycle, and
otherwise as the Chair or members require. To enable it to carry
out its responsibilities, the Committee has an annual rolling
agenda maintained by the Company Secretary, and regularly
reviewed in conjunction with management. The Company
Secretary also maintains a tracker of actions arising from
meetings. This ensures the agenda for each meeting aligns with
the financial reporting and audit cycles, as well as particular
matters arising throughout the year considered appropriate by
the Committee for its scrutiny. At the next scheduled Board
meeting, the Chair of the Committee reports formally to the
Board on the Committee’s proceedings, including how it has
discharged its responsibilities.
The Committee held four scheduled meetings during FY2019/20
and the table below provides details of members’ attendance at
those meetings. At the invitation of the Chair of the Committee,
other regular attendees, who can withdraw as necessary,
included at some or all of the meetings: the Chairman, the Chief
Executive Officer, Matthew Doughty (in his capacity as Partner
Director), the Group Risk Director, the Head of Internal Audit
and the Deputy Company Secretary.
Attendance at Risk Committee meetings
held during the period to 30 April 2020
Directors as at 30 April 2020
Samantha Tymms (Chair)
Tea Colaianni
Vinodka Murria
Luke Savage
Chris Sullivan
Number
of meetings
eligible to attend
Number
of meetings
attended
4
4
4
4
4
4
4
4
4
4
Risk Committee report
Sam Tymms
Chair, Risk Committee
Dear shareholder,
As Chair of the Risk Committee, I am pleased to present this
report, which provides insight into the Committee’s activities
during our first full financial year of operation following the
Company’s listing. The Committee supports the Board in fulfilling
its obligations to ensure a framework of prudent and effective
controls, which enable it to assess and manage risks, including
those to the long-term success of the Group.
Throughout the year, the Committee has monitored the Group’s
procedures for managing risk, overseen the risk framework, and
determined the nature and extent of the principal risks to the
Group, as described further below. In all its deliberations, the
Committee has sought to uphold the importance of an
integrated approach to the risk taxonomy, risk register and risk
assurance activity. The Committee has also focused on, among
other things, the Group’s cyber and information security risks
and the Group’s insurance arrangements.
Alongside all my Independent Non-Executive Director
colleagues, I sit on each of the Committees of the Board.
I particularly value the close and effective monitoring of risk
management achieved by my membership of the Audit
Committee, as well as the Chair of the Audit Committee’s
membership of this Committee.
In the very different circumstances the challenges of COVID-19
present, the Committee focuses on, and receives regular updates
about, the Group’s management of the risks this environment
presents, and how we should manage these in the short, and
longer, term. Alongside this, the nature of the assurance activity
the Group undertakes must also evolve so the Committee can
satisfy itself that we continue to consider, manage, measure and
report the full range of risks we face, effectively.
Samantha Tymms
Chair, Risk Committee
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 72
Risk Committee report continued
The role of the Risk Committee
The Committee’s main responsibilities include:
− advising the Board on the Group’s overall risk appetite,
tolerance and strategy
− overseeing and advising the Board on the Group’s current
risk exposures and future risk strategy
− keeping under regular review the Group’s overall risk
assessment processes
− providing advice to the Board on the assessment of principal
risks facing the Group
− approving the remit of the risk management and
compliance functions
− considering the major findings of internal investigations and
management’s response.
There are full details of the Committee’s structure and role in
its Terms of Reference, available on the Group’s website at
dwfgroup.com/en/investors.
Risk management governance structure
Board
The Board establishes the risk appetite for the Group, so
management can manage, measure and report on risk
appropriately across the Group. The Board delegates oversight
of risk management activities to the Risk Committee. You can
find more detail about the Board’s activities on page 61.
Audit Committee
The Audit Committee oversees the development and
implementation of the Group’s Internal Audit assurance
framework and as part of this regularly reviews the effectiveness
of the Group’s risk management framework and internal control
systems. You can find more detail about the Audit Committee’s
activities on pages 67 to 70.
Risk Committee
The Risk Committee characterises the Group’s principal areas of
risk through the Group Risk Taxonomy. This ensures oversight of
the Group’s approach to risk management and the development
of management and mitigation approaches, to ensure risks
remain, or are quickly brought within, the Group’s risk appetite.
The Risk Committee also monitors and reviews the
effectiveness of the Group’s compliance function, as well as
providing oversight and advice to the Board in relation to future
risk strategy.
Executive Risk Committee (‘ERC’)
The Executive Risk Committee is a management committee
chaired by the Chief Executive Officer. It comprises senior Group
executives including members of the Executive Board and the
Group Risk Director. The Committee oversees the operational
management of the Group’s risks by identifying, assessing,
mitigating, and reporting risk.
Key activities during FY2019/20
The Committee discharged its responsibilities during
FY2019/20 through:
− further developing the Group’s risk framework and taxonomy
to inform the Group’s Risk Appetite Statement described
on page 45, including monitoring the consistency of risk
management principles and processes across the Group
− the ongoing assessment of principal risks, including their
management and mitigation
− reviewing the second line internal assurance plan and
receiving reports on results of assurance activities, including
in relation to emerging risks and controls effectiveness
− reviewing the Group’s procedures and systems for detecting
fraud and financial crime, the prevention of bribery, corruption
and money laundering, and compliance with the Market
Abuse Regulations
− receiving reports on the plans for effective risk management
of major commercial initiatives, including acquisitions, at
initiative proposal stage as well as during or after integration
− considering cyber and information security risks facing
the Group
− monitoring risks to the Group arising from Brexit uncertainty
− reviewing and advising the Board on the Group response
to COVID-19.
Areas of focus for FY2020/21
During FY2020/21, the Committee expects to:
− continue its ongoing assessment and development of the
Group Risk Taxonomy and principal risks
− review and develop the Group’s overall risk appetite,
tolerance and strategy, and advise the Board accordingly
− further establish risk management principles and
processes consistently across the Group
− make further progress on strengthening the control
framework and the application of strict risk management
− continue to receive reports on how risks affecting the
Group are managed, including current and prospective
macroeconomic and financial risks, and regularly monitor
the Group’s compliance with applicable legislation
− receive analysis and recommendations from management
on the requirement for, plus scope and terms of,
insurance coverage across the Group
− further review and advise the Board on the Group’s
response to COVID-19, including risks which may arise
from the global response to, and management of,
the pandemic.
DWF Group plcAnnual report and financial statements 2020 Directors’ Remuneration report
73
− Gross lock-up days, debtors days and WIP days 206 days
(125 debtor days and 81 WIP days) (FY2018/19: 203 days
(122 debtor days and 81 WIP days))
− Free cash flow -£7.2m (FY2018/19: -£18.1m)
− Net debt £64.9m (FY2018/19: £35.3m)
− Employee engagement score 76 (Previous survey: 75)
Trading through the majority of FY20 was strong and the Group
made significant investments to support its growth objectives.
The sudden and far reaching impact of COVID-19 had a material
effect on the final quarter with a resulting impact on profitability.
Despite this, we delivered a solid performance with overall
revenue growth of 10.9% and organic growth of 2.0%.
While we achieved record Group revenue, with an organic
growth rate that compares to other global law firms in FY20,
it was lower than expected.
The Committee, together with the Board, considered whether
the business should utilise the Coronavirus Job Retention
Scheme offered by the UK Government. Having taken into
account the interests of all of our stakeholders, and in particular
our employees, we decided not to do so and continued to pay
all our UK staff.
Changes to the Board
Since the year end we are reporting on, there have been
a number of changes to our Board.
CEO
The Company announced on 29 May 2020 that Andrew
Leaitherland had informed the Board of his intention to step
down as Group Chief Executive Officer with immediate effect.
Andrew Leaitherland also stepped down as Managing Partner
of DWF Law LLP and DWF LLP.
In responding to the challenges created by COVID-19, the
Board considered that strong and experienced leadership was
essential. The Board believed that Sir Nigel Knowles, Chairman,
would provide this leadership, and as a consequence, the Board
asked him to assume the role of Group Chief Executive Officer
with immediate effect. Chris Sullivan, Senior Independent
Director, was appointed interim Chairman. A committee of
independent directors was formed to run a selection process
in an effective and timely manner for a permanent Chairperson.
Upon his departure, Andrew’s unvested awards under the
LTIP lapsed. Andrew held no other incentive awards. He is
receiving 12 monthly payments including basic salary pension
entitlements and other contractual benefits, in lieu of the
12-month contractual notice period in accordance with the
provisions of his service agreement, although he is required to
mitigate his loss during the notice period by seeking alternative
employment or engagement. In relation to locked-up shares
received at IPO in exchange for his ownership interest in the
DWF business, these were to be released over a five-year
period in five equal tranches. We agreed that Andrew would
receive the first two tranches he was contractually entitled to,
which will be released on the announcement of the preliminary
results for the financial years ended 30 April 2020 and 2021.
Tea Colaianni
Chair, Remuneration Committee
Dear shareholder,
I am pleased to present the Directors’ Remuneration report
for the year ended 30 April 2020. The Remuneration Committee
(the ‘Committee’) had its first full annual cycle since the IPO in
this financial year. The Company’s first listed-company Annual
General Meeting (the ‘AGM’) took place on 20 September 2019.
The Remuneration Policy and Annual Report on Remuneration
were approved at this AGM, receiving significant shareholder
support (the Annual Report on Remuneration received 98.74%
votes in favour and our Remuneration Policy received 98.99%
votes in favour. You can find more detail on page 91).
As I write this letter, one of the key focuses of our business
has necessarily been in responding to the disruption caused
by COVID-19, particularly in the last two months of the financial
year we are reporting on. The Remuneration Committee is
very aware of its responsibilities in taking account of this in
its considerations and decision making for FY2019/20, as well
as the current year.
This Directors’ Remuneration report sets out the context
of, and insight into, our Director pay arrangements, how
our remuneration framework is aligned with the rest of the
workforce, and the decisions the Committee made as a result
of business performance for this year. Where the Committee
has exercised its judgement or discretion is documented clearly.
Group performance for the 2019/20 financial year
The implementation of our strategy (as outlined on page 78)
for our first full year as a listed company has been measured
against the KPIs set out below:
− Revenue growth +10.9% (FY2018/19: +15.2%)
− Underlying organic revenue growth +2.0% (FY2018/19:
+12.5%)
− Gross profit margin 47.9% (FY2018/19: 53.5%)
− Cost to income ratio 42.6% (FY2018/19: 42.7%)
− Underlying adjusted EBITDA £21.8m (FY2018/19: £27.8m)
− Underlying adjusted PBT £13.8m (FY2018/19: £20.3m)
− Adjusted EPS 3.0p (FY2018/19: 7.2p)
− Net Partner Joiners 64 (FY2018/19: 20)
− Revenue per partner: £784.3k (FY2018/19: £855.7k)
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 74
Directors’ Remuneration report continued
We determined that 50% of the remaining tranches be retained
by Andrew in recognition of his contribution to the business
during his tenure in office – and these will be released in
accordance with the original schedule (in 2022, 2023 and 2024)
– but that the remaining 50% be clawed back immediately.
You can find more detail on Andrew’s leaving arrangements
on page 91 of this Report and on the Company’s website at
dwfgroup.com/en/investors.
The terms of Sir Nigel Knowles’ appointment and his
remuneration are identical in all respects to those received by
Andrew Leaitherland as Group Chief Executive Officer and, as
such, are in line with the Remuneration Policy. He receives
a salary of £530,000 per annum. He has a maximum opportunity
of 150% of salary as an annual bonus (with half of the bonus
award to be paid out in cash, with the remainder deferred into
shares subject to a three-year vesting period). He also has
a maximum opportunity of up to 200% of salary in relation to
LTIPs. Sir Nigel is required to hold 250% of salary in shares,
with a post-cessation shareholding requirement of 100% of the
pre-cessation shareholding requirement (or actual shareholding
if lower) for two years following cessation of his employment.
He is entitled to private medical insurance, private health
insurance, life insurance and a pension contribution allowance
of up to 7% of salary (aligned with the majority pension
contribution applicable to the wider UK workforce).
FY2019/20 bonus
The Committee considered the financial performance of the
Company when determining the bonus outcomes for the
Executive Directors (being Andrew Leaitherland and Chris
Stefani). The performance conditions were:
− 70% adjusted PBT; and
− 30% strategic and operational objectives (including improved
gross lock-up).
Having noted that the Adjusted PBT and lock-up performance
conditions were not achieved for FY2019/20, and following
a review of business performance and the current economic
situation in relation to COVID-19, the Committee exercised its
discretion not to pay any bonus for the partial completion of the
Executive Directors’ strategic and operational objectives. You can
find further details on those strategic and operational objectives
on pages 89 to 90 of this report.
LTIP and other share incentives vesting
No Executive Directors’ share incentives vested during the year.
LTIP awards for FY2019/20
The Company made its first grant of LTIP awards in August 2019
that will vest in August 2022. The awards were made with the
following performance conditions to Andrew Leaitherland at
175% of salary and to Chris Stefani at 125% of salary:
Chairman and Deputy Chairman
The Company announced on 31 July 2020 that Jonathan
Bloomer would join the Board as Chairman, with effect
from 1 August 2020. In addition to being Chairman, Jonathan
Bloomer chairs the Nomination Committee and is a member
of the Remuneration Committee, from 1 August 2020.
The Remuneration Committee determined that his total
annual fee would be £170,000.
On the appointment of Jonathan Bloomer, Chris Sullivan took
on the role of Deputy Chairman, also from 1 August 2020.
He continues as Senior Independent Director of the Company
and Non-Executive Director representing the employee voice
on the Board, and acts as the bridge between the partners in
the Group and the Board. Chris continues to be a member
of the Nomination, Risk, Remuneration and Audit Committees.
The Remuneration Committee determined that Chris would
receive an annual fee of £20,000 for the additional roles.
This is in addition to his existing fees of £75,000.
COO and Partner Directors
The Company will announce on 8 September 2020 the following
appointments with effect from 22 October 2020:
− Matthew Doughty as Group Chief Operating Officer of
DWF Group plc. Matthew Doughty will step down as
Partner Director at the same time; and
− Following a thorough internal recruitment process, Seema
Bains and Michele Cicchetti as Partner Directors of DWF
Group plc. The position of Partner Director is designated by
the Board as a Non-independent, Non-Executive Director
position. A Partner Director represents the partners of DWF
Law LLP and DWF LLP and is therefore a partner shareholder
representative on the Board.
− EPS (40% weighting)
− ROCE growth (40% weighting)
− Cash conversion (20% weighting)
You can find further details of these metrics, including targets
and rationale, on page 82 of this report.
The Committee decided that Andrew’s LTIPs would lapse on
his departure from the business.
Salary review
The Remuneration Committee exercised its discretion to defer
its review of annual pay for the Executive Directors and senior
management, and fee review for the Non-Executive Directors,
from May 2020 to December 2020, with rises (if any) to have
effect from 1 January 2021. We made this decision in light of
the outbreak of COVID-19 and its impact on the business, and
to bring the review into line with the wider workforce salary
review timetable.
Shareholder considerations
In FY2019/20, I met with some of our major shareholders and
proxy advisors to discuss the Remuneration Policy we put
forward at the 2019 AGM, and to obtain any specific areas of
feedback. On behalf of the Remuneration Committee, I would
like to thank the shareholders and proxy advisors who have
provided us with feedback. We will continue to maintain
transparent and open dialogue with our shareholders.
No material issues or concerns were raised during these
shareholder meetings.
The Investment Association did however note that in relation
to post-cessation shareholding requirements, they expect
that Executive Directors should be required to retain 100%
rather than 50% of the shareholding requirement (or actual
shareholding, if lower), for two years post-cessation of
employment. As a result, the Remuneration Committee decided
in January 2020 to increase its post-cessation shareholding
DWF Group plcAnnual report and financial statements 2020 75
− due to the impact on the global economy of COVID-19,
the Committee resolved to avail itself of the Investment
Association’s recommendation to grant awards in the 42-day
window after the Company announces its final results on
8 September 2020, but defer target-setting for six months
from the date of grant; and
− will ensure that at the time of vesting it will exercise its
discretion, where appropriate, in relation to any windfall gains
and to adjust unintended outcomes due to these unusual
COVID-19 circumstances.
Further detail of how our remuneration for Executive Directors
aligns with our strategic priorities, is set out on page 78 of
this report.
If you would like to discuss any aspect of this Directors’
Remuneration Report, I would be happy to hear from you.
You can contact me through the Company Secretary, Mollie
Stoker. If you would like to ask any questions in respect of this
Report at the AGM, please see the notes to the notice of AGM
which sets out the arrangements for this year. I look forward to
your support on the Annual Report on Remuneration at the
upcoming AGM.
Tea Colaianni
Chair, Remuneration Committee
Included in this report
The Remuneration Committee and its
activities during the year
Pages
76 and 77
Remuneration – At a glance including:
Business context and how our incentive performance
measures align to our strategy
78
Remuneration outcomes for FY2019/20 –
At a glance
Remuneration Policy – At a glance
79 to 81
82 and 83
requirements for the Company’s Executive Directors from
50% to 100% of the shareholding requirement (or actual
shareholding, if lower), for two years following cessation
of employment.
Wider workforce considerations
When considering executive pay, the Committee takes into
account the wider workforce remuneration and conditions.
We believe allowing all our employees to share in the success
of the Company is a key performance driver. At IPO, eligible
individuals received IPO shares under the Buy-As-You-Earn
(‘BAYE’) scheme with a value of to up to 20% of their salary
(with 2% of that being sold on their behalf and paid as a cash
bonus). During FY2019/20, to further enable this, we also rolled
out a BAYE matched-share scheme in the UK, which resulted in
15% of our employees taking part in the scheme. We intend to
roll this out to other international jurisdictions during FY2020/21.
At pages 84 to 89 of this report, there are details of the pay
conditions of our wider workforce, the Group-CEO-to-employee
pay ratio, how we use incentives throughout the business, and
our gender-pay statistics.
You can find further detail on the key matters covered by the
Committee during the year on page 77.
Looking ahead
The Committee is mindful that like all businesses in our sector
and beyond, we face the considerable challenge of navigating an
unpredictable global economy that will continue to be affected by
COVID-19 for the foreseeable future. COVID-19 had a significant
impact on our business but we have taken, and will continue to
take, a number of actions to ensure DWF has the strength and
resilience to perform not only through this financial year, but
for the long term. Despite the challenges FY2020/2021 will
undoubtedly bring, we look forward with cautious optimism to
the year ahead, and to capitalising on any opportunities that may
emerge through our committed and talented workforce and
through our differentiated range of services.
To support and enable strong performance, not only through
this current financial year but for the long term, the Committee
considers how decisions on incentives (bonuses and long-term
incentive plans) link with the Group’s strategy within the
framework of our approved Remuneration Policy.
The Committee has decided that, as with last year, bonus
arrangements for Executive Directors are in line with the
Remuneration Policy, namely with a maximum opportunity
of 150% of salary for the CEO and 100% of salary for the
CFO. Performance conditions and weightings continue to be:
− 70% adjusted PBT; and
− 30% strategic and operational objectives (including improved
gross lock-up). We will disclose these fully, retrospectively
in next year’s Remuneration Report.
The Committee also considered the impact on future long-term
incentive awards. Having taken advice from its remuneration
advisors, the Remuneration Committee:
Wider workforce remuneration including:
Remuneration principles and wider workforce
remuneration across the Group
Communication and engagement with
employees and partners
− concluded that the same performance conditions would apply
CEO-to-worker pay ratio
84 to 86
86
86 to 88
to long-term incentive awards made in FY2020/21, being:
UK Gender and Ethnic pay-gap reporting
88 and 89
• EPS (40% weighting);
• ROCE growth (40% weighting); and
• Cash conversion (20% weighting)
Annual report on remuneration
89 to 91
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 76
Directors’ Remuneration report continued
The Remuneration Committee and its
activities during the year
Remuneration Committee members
The Committee is chaired by Tea Colaianni. The Committee is
made up of a minimum of three members, each an Independent
Non-Executive Director. The members of the Committee during
the year are listed in the table below. The Chair of the Board is
a member of the Committee and was considered independent
on appointment as Chair of the Board. Members of the
Committee collectively have appropriate knowledge, expertise
and professional experience concerning remuneration policies
and practices. The expertise and experience of the members
of the Committee is set out in each of their biographies on
pages 52 and 53. Mollie Stoker is appointed as Secretary to
the Committee.
Remuneration Committee meetings
The Committee meets at least four times a year and otherwise
as the Chair requires. To enable the Committee to carry out its
responsibilities, the Committee has an annual rolling agenda
maintained by the Company Secretary, which is regularly
reviewed in conjunction with management. The Company
Secretary also maintains a tracker of actions arising out of
meetings of the Committee. This ensures the agenda for each
Committee meeting aligns with the remuneration strategy, as
well as particular matters arising throughout the year considered
appropriate by the Committee for its scrutiny. At the next
scheduled Board meeting, the Chair of the Committee reports
formally to the Board on the proceedings of the Committee,
including how it has discharged its responsibilities.
The Committee held four scheduled meetings during FY2019/20,
and the table below provides details of members’ attendance at
those meetings. At the invitation of the Chair of the Committee,
other regular attendees, who can withdraw as necessary,
included at some or all of the meetings: the Chief Executive
Officer, the Chief Financial Officer, Matthew Doughty (in his
capacity as Partner Director), the Human Resources Director,
the Head of Reward and the Deputy Company Secretary.
No Director or member of senior management was present for
any discussions that related directly to their own remuneration.
Attendance at Remuneration Committee
meetings held during the period to 30 April 2020
Directors as at 30 April 2020
Number
of meetings
eligible to attend
Number
of meetings
attended
Tea Colaianni (Chair)
Sir Nigel Knowles
Chris Sullivan
Vinodka Murria, OBE
Luke Savage
Samantha Tymms
4
4
4
4
4
4
4
31
4
4
4
4
Note
1. Sir Nigel Knowles was unable to attend the meeting held on 29 July 2019 due
to an unavoidable diary commitment.
None of the Committee members has any personal financial
interest (other than as shareholders) in the decisions made
by the Committee, conflicts of interest arising from cross-
directorships or day-to-day involvement in running the business.
During the financial year, PwC advised the Remuneration
Committee on all aspects of the Remuneration Policy for
Executive Directors and members of the Executive Board.
PwC also provided the Company with tax and share scheme
support work during the year. The Remuneration Committee
was satisfied that no conflict of interest exists or existed in the
provision of these services. PwC was appointed by the
Remuneration Committee, and the Committee is satisfied that
the advice provided is independent. PwC is a member of the
Remuneration Consultants Group and the voluntary code of
conduct of that body is designed to ensure objective and
independent advice is given to remuneration committees.
Fees of £81,725 were provided to PwC during the year in
respect of remuneration advice received. Our adviser (PwC)
attends meetings of the Committee by invitation. PwC does not
have any other connection to the Company or its Directors.
The role of the Remuneration Committee
While giving full consideration to the matters set out in the UK
Corporate Governance Code 2018 (the ‘Code’) and any other
relevant laws and regulations in the jurisdictions the Group
operates in, the Committee’s main responsibilities include:
− making recommendations to the Board regarding the Group’s
framework or broad policy for the remuneration of the Chair
of the Board, the Executive Directors and senior management;
− determining the entire individual remuneration packages for
the same, including:
• approving any severance compensation arrangements in
accordance with the Remuneration Policy, which are fair,
do not reward failure and fully recognise the individual’s
duty to mitigate any loss; and
• considering how the pay and work conditions of the Group’s
wider workforce should be taken into account when
determining remuneration;
− consistent with the approach applicable to the wider
workforce, determining and administering the Group’s share
plans and equity incentive plans in respect of the Chair of the
Board, the Executive Directors and senior management; and
approving awards and performance conditions, including
satisfaction of performance conditions and the exercise of any
discretion by the Committee;
− regularly reviewing the ongoing appropriateness and relevance
of the Remuneration Policy; and
− reviewing remuneration and related policies applicable to the
Group’s wider workforce.
Full details about the structure and role of the Committee are
contained in its Terms of Reference, available on the Group’s
website at dwfgroup.com/en/investors.
DWF Group plcAnnual report and financial statements 2020 77
Areas of focus for FY2020/21
During FY2020/21, the Committee has already,
or expects to:
− following his standing down as Group Chief Executive
Officer, determine the remuneration payable to
Andrew Leaitherland;
− determine Sir Nigel Knowles’ remuneration on his
appointment as Group CEO;
− determine the fees payable to Jonathan Bloomer as
Chair and Chris Sullivan as Deputy Chair of the Board;
− determine the individual remuneration package for
the COO;
− confirm that no fees are payable to Partner Directors;
− continue to review regularly the ongoing appropriateness
and relevance of the Remuneration Policy;
− look to improve pay fairness and transparency by
considering wider workforce policies, to ensure alignment
with Executive Director and senior management
remuneration arrangements;
− develop further the communication with prospective
members of the wider workforce on the benefits of the
equity element of the remuneration package offered by
the Group;
− formulate principles for adjusting incentives for corporate
activity such as M&A; and
− oversee the roll-out of the BAYE scheme internationally,
where the relevant jurisdictions permit.
Key activities during FY2019/20
The Committee discharged its responsibilities during
FY2019/20 through:
− establishing the Executive Director bonus plan and the
business-wide bonus plan for FY2019/20;
− examining the Executive Directors’ half-year progress
against objectives;
− determining Executive Directors’ bonus outcomes
for FY2019/20;
− enhancing post-cessation shareholding requirements for
Executive Directors;
− setting annual bonus and long-term incentive plan targets
and awards for FY2020/21 for Executive Directors, using
demanding financial measures designed to align with strategic
objectives and shareholder interests;
− considering the selection of remuneration advisors to the
Committee and subsequently appointing PwC;
− reviewing remuneration arrangements for senior
management;
− forming the Group’s approach to good and bad leaver
determination, pursuant to lock-up deeds relating to pre-IPO
share allocations for certain partners and other individuals,
as well as pursuant to the Group’s share plans;
− establishing policies for the fair and consistent administration
across the wider workforce of the Group’s share plans and
equity incentive plans;
− overseeing wider workforce remuneration arrangements,
including receiving the Company’s Gender Pay Gap Report
and reports on the Group’s employee (including partner)
engagement mechanisms;
− approving grants to the wider workforce under the Group’s
share plans and equity incentive plans;
− receiving reports on engagement with proxy advisors
and major shareholders from the Chair of the Committee,
Matthew Doughty (as Partner Director) and the
Company Secretary;
− receiving presentations from the Committee’s remuneration
advisors on developments in corporate governance and
market trends, to inform the Committee’s regular review of
the Remuneration Policy, including a report on the potential
circumstances in which it might exercise its discretion in
the future; and
− considering the potential impact of COVID-19 on remuneration
arrangements and decisions to be made by the Committee.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 78
Directors’ Remuneration report continued
Remuneration – At a glance
This section of the Directors’ Remuneration Report provides an overview of:
− the business context and how our incentive performance measures align to our strategy;
− remuneration outcomes for FY2019/20; and
− Remuneration Policy operation in FY2019/20 and intended implementation in FY2020/21.
Business context and how our incentive performance measures align to our strategy
Business context
Trading through the majority of FY20 was strong and the Group made significant investments to support its growth objectives.
The sudden and far reaching impact of COVID-19 had a material effect on the final quarter with a resulting impact on profitability.
Despite this, we delivered a solid performance with overall revenue growth of 10.9% and organic growth of 2.0%. While we achieved
record Group revenue, with an organic growth rate that compares to other global law firms in FY20, it was lower than expected.
The Committee is mindful that like all businesses in our sector and beyond, we face the considerable challenge of navigating an
unpredictable global economy that will continue to be affected by COVID-19 for the foreseeable future. COVID-19 had a significant
impact on our business, but we have done, and will continue to do, a number of things to ensure DWF has the strength and
resilience to perform not only through this financial year, but for the long term. Despite the challenges FY2020/21 will undoubtedly
bring, we look forward with cautious optimism to the year ahead and on capitalising on any opportunities that will emerge through
our committed and talented workforce and through our differentiated range of services.
How our incentive performance measures align to our strategy
The implementation of our strategy (as outlined on pages 18 to 27) for FY2019/20 was measured against certain KPIs (set out in the
table below).
The Committee continually considers the performance measures we use for our incentives, to ensure they support the delivery
of our strategy.
Our strategic priorities
Understanding our clients
To provide the best possible service for our clients,
we need to understand their needs. Knowing our
clients means we can support them in the right way,
either through top-quality legal and strategic advice
through our Complex Services, Managed Services
or any of our Connected Services.
Engaging our people
Our people engagement is built on shared
values, clear set goals, behaviour and incentive
structures, and we support our colleagues through a
culture of innovation and inclusion. This enables us to
recruit, retain and develop high-performing and
high-quality talent which is vital in providing excellent
service, and achieving results and lasting value.
Doing things differently
Innovation allows us to make a differentiated
and competitive offering, and our Connected
Services are key to this. Providing a greater service
and product suite through internal research,
development and through acquisition enables us to
become our clients’ chosen partner for outsourced
legal and Connected Services.
Revenue
growth
Underlying
organic
revenue
growth
Gross profit
margin
Cost to
income ratio
Underlying
adjusted
EBITDA
Underlying
adjusted
PBT
Adjusted
EPS
Net Partner
Joiners
Revenue
per partner
Our key performance indicators
Free cash
flow
Net
debt
Employee
Engagement
Score
Gross
lock-up
days,
debtors
days and
WIP days
Annual bonus
PBT
Ensures focus on profitable growth.
Is a key measure of organic growth and is linked to shareholder value.
Strategic and personal (including improved lock-up)
Ensures focus on reducing the time it takes to invoice and collect revenue.
Personal objectives are designed to ensure the Executive Directors focus
on operational efficiencies, manage risk effectively, remain client-focused,
and are required to drive employee engagement.
Long term incentives
EPS
Links reward to ‘in-year’ underlying equity returns to shareholders.
ROCE
Promotes disciplined capital allocation by linking reward to investment return.
Supports the strategy of growth, both organic and through acquisitions.
Ensures focus on the efficiency by which earnings are generated.
Cash conversion
Supports focus on cash collection.
DWF Group plcAnnual report and financial statements 2020 79
Remuneration outcomes for FY2019/20 – At a glance
Directors’ Remuneration for the year ending 30 April 2020
Certain details set out on pages 79 to 91 of this Directors’ Remuneration report have been audited by the Auditor.
Single total figure of remuneration (audited)
The table below sets out the single total figure of remuneration paid by the Company following its admission to listing on 15 March
2019 (‘Admission’) to each Executive Director. For FY2018/19, the table reflects the period from Admission to the end of the financial
year on 30 April 2019. For FY2019/20, the table reflects the full financial year to 30 April 2020. Figures provided have been calculated
in accordance with the UK disclosure requirements: the Large and Medium-Sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (Schedule 8 to the Regulations).
It is the Committee’s view that it is important, when considering the remuneration paid in the year under the single figure, to
take a holistic view of the Executive Directors’ total remuneration linked to the performance of the Company. In the Committee’s
opinion, the impact on the total remuneration of the Executive Director is more important than the single figure in any one year.
This approach encourages Executive Directors to take a long-term view of the sustainable performance of the Company. The ability
for the Executive Directors to gain and lose, in alignment with shareholders, dependent on the share price performance of the
Company at a level which is material to their total remuneration, is a key facet of the Remuneration Policy.
Salary/fees £
Taxable
benefits3 £
Bonus4 £
LTIP5 £
Pension £
Other £
Total £
Total fixed £
Total
variable £
FY
19/202
18/191
19/20
18/19
19/20
18/19
19/20
18/19
19/20
18/19
19/20
18/19
19/20
18/19
19/20
18/19
19/20
18/19
Executive Directors
Andrew
Leaitherland
(CEO)7
Chris Stefani
(CFO)
530,000 64,551
6,677
1,880
320,000 38,974
5,368
1,104
Non-Executive Directors
Sir Nigel
Knowles
200,000 24,359
Luke Savage
72,500
8,830
Tea Colaianni
72,500
8,830
Vinodka Murria 65,000
8,830
Chris Sullivan
75,000
9,135
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
NA
37,1006 4,518
NA
22,4006 2,728
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
573,777 70,949 573,777 70,949
347,768 42,806 347,768 42,806
200,000 24,359 200,000 24,359
72,500
8,830
72,500
8,830
72,500
8,830
72,500
8,830
65,000
8,830
65,000
8,830
75,000
9,135
75,000
9,135
0
0
NA
NA
NA
NA
NA
0
0
NA
NA
NA
NA
NA
Samantha
Tymms
Matthew
Doughty 7
72,500
8,830
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
72,500
8,830
72,500
8,830
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Notes
1. For FY2018/19, the table reflects the period from Admission on 15 March 2019 to the end of the financial year on 30 April 2019.
2. For FY2019/20, the additional fees for Committee Chairs or the position of Senior Independent Director are included in the Salary/fees column. In FY2018/19 these
fees were reported in the Other column on page 76 of the Annual Report and Financial Statements 2019 but they are now included in the FY2018/19 column for
ease of comparison. You can find further details on page 83.
3. Taxable benefits for the CEO and CFO comprise private medical insurance for the Executive and their spouse or civil partner as well as any dependent children,
private health insurance, and life assurance up to four times salary (up to £1m).
4. If awarded bonus is paid 50% in cash and 50% in shares.
5. LTIPs are made through the Executive Incentive Plan (‘EIP’). You can find further details on page 82.
6. The pension paid to the CEO was as a cash allowance as he had lifetime allowance protection. Payments were in line with the employee pension scheme and
are calculated as a percentage of basic salary. The cash allowance was equivalent to 7% of the CEO’s salary. The pension paid to the CFO was partly paid directly
into the company provided pension scheme (£5,000) with an additional amount paid as a cash allowance. Together these payments were equivalent to 7% of the
CFO’s salary.
7. Matthew Doughty and Andrew Leaitherland acted as Partner Directors during the year. You can find further details on page 65 of the Nomination Committee Report.
The position of Partner Director is designated by the Board as a Non-independent, Non-Executive Director position. A Partner Director represents the partners of
DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on the Board. Partner Directors do not receive any fees for the position on the
Board because remuneration is as a member of DWF Law LLP or DWF LLP (determined by his or her ‘home office’, and in some circumstances also by way of
a limited salary as an employee of DWF Connected Services Holdings Limited.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 80
Directors’ Remuneration report continued
Bonus for the financial year ended 30 April 2020 (audited)
Performance condition
Adjusted PBT
Gross lock-up
Strategic and operational objectives
(see pages 89 and 90 for detailed breakdown)
Total
Achievement
percentage of
performance
maximum
Achievement
percentage of
maximum bonus
opportunity1
Bonus earned
as a percentage
of salary2
Bonus outcome
0%
0%
NA
0%
0%
0%
NA
0%
0%
0%
0%
0%
£0
£0
£0
£0
Weighting
70%
10%
20%
100%
Notes
1. Maximum bonus opportunity for the CEO was 150% of salary and for the CFO was 100% of salary.
2. The Committee considered the financial performance of the Company when determining the bonus outcomes for the Executive Directors. Having noted that the
adjusted PBT and lock-up performance conditions were not achieved for FY2019/20, and following a review of business performance and the current economic
situation in relation to COVID-19, the Committee exercised its discretion not to pay any bonus for the partial completion of the strategic and operational objectives.
Adjusted PBT (70%)
Gross lock-up (10%)
£50m
£45m
£40m
£35m
£30m
£25m
£20m
£15m
£10m
£5m
£0m
Maximum
£43.1m (100%)
Target
£41.1m (50%)
Threshold
£37.7m (20%)
Actual
£15.2m (0%)
215
210
s
y
a
D
205
200
195
Actual
206 days (0%)
Threshold
203 days (20%)
Target
200 days (50%)
Maximum
199 days (100%)
Long-term incentive awards made in the financial year ending 30 April 2020 (audited)
The first LTIP awards, which are conditional share awards made through the EIP, were granted on 27 August 2019 and will vest on
27 August 2022.
Executive Director
Andrew Leaitherland (CEO)3
Chris Stefani (CFO)
Award date
% of salary1 Shares granted
Face value2
27 August 2019
27 August 2019
175%
125%
779,411
336,134
£927,500
£400,000
Notes
1. Maximum LTIP opportunity for the Executive Directors was 200% of salary.
2. Based on the share price of the Company of £1.19 as at 27 August 2019.
3. Awards made to Andrew under the Long-Term Incentive Plan granted in 2019 lapsed on his departure.
These LTIP awards have a three-year performance period and then following vesting are subject to a two-year holding period.
During this holding period, dividends are payable on the vested shares.
The following table sets out the performance conditions and targets for FY2019/20 EIP grant:
Performance condition and percentage of award opportunity
Cumulative Three-Year EPS (40% weighting)
Average Annual ROCE (40% weighting)
Average Cash Conversion (20% weighting)
*Straight-line vesting applies between these points.
No other awards were made to Executive Directors during the year.
Threshold
(20% vesting)
38.1 pence
29.5%
78%
Target
(50% vesting)
42.2 pence
32.8%
87%
Maximum
(100% vesting)
46.4 pence
36.1%
96%
DWF Group plcAnnual report and financial statements 2020 81
Achievement of shareholding guidelines as at 30 April 2020
The following chart illustrates the achievement of the shareholding guidelines by the Executive Directors as at 30 April 2020,
against the minimum shareholding requirement under the Remuneration Policy (see page 83 for a detailed breakdown). The chart
is designed to illustrate the value of their shareholding as a percentage of base salary. Their shareholding for these purposes does
not include unvested LTIP awards. For full information on all Directors’ interests in shares see table on page 90.
Value of shares owned as a percentage of base salary
Shareholding guidelines
Chris
Stefani
Andrew
Leaitherland
0
200
400
600
Percentage of Base Salary
800
1,000
1,200
Achievement of Shareholding
Guidelines beginning of FY2019/20
Achievement of Shareholding
Guidelines end of FY2019/20
Executive Director
Andrew Leaitherland (CEO)
Chris Stefani (CFO)
Base salary
£530,000
£320,000
Number
Value1
Number
Value2
7,067,628
1,114,0093
£8,537,694
£1,345,723
7,067,628
1,125,051
£5,724,779
£911,267
Change4
-32.9%
-32.3%
Notes
1. Based on share price of the Company as at 1 May 2019 of £1.21.
2. Based on share price of the Company as at 30 April 2020 of £0.81.
3. The one-off award made to Chris Stefani at the time of the IPO as described on page 77 of the Annual Report and Financial Statements 2019 is included here.
The one-off IPO award was granted to him to create an equity interest at IPO equivalent to what he would have received at IPO if he had been capable of being
a member of DWF LLP under the regulations applicable to DWF LLP.
4. The percentage change is related to the share price and not a reduction in shares held.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 82
Directors’ Remuneration report continued
Remuneration Policy – At a glance
Key features of the Remuneration Policy, operation in FY2019/20 and intended implementation in FY2020/21
Full details of the Remuneration Policy are set out in the 2019 Directors’ Remuneration Report on pages 81 to 93, which you can find
at dwfgroup.com/en/investors/reports-and-presentations.
The below outlines the key features of our Remuneration Policy as voted on by shareholders at the 2019 AGM. The Policy is intended
to remain in place in its current format for at least three years, with its operation in FY2019/20 and intended implementation for
FY2020/21 summarised below.
Element
Operation in FY2019/20
Intended operation in FY2020/21
Base salary
− CEO £530,000
− CFO £320,000
− CEO £530,000
− CFO £320,000
y
a
p
d
e
x
i
F
y
a
p
e
l
b
a
i
r
a
V
Executive Directors received a rise of 0%.
Average employee (includes partners) rise 3.5%.
Benefits
Pension
In line with policy
In line with policy:
Annual Bonus
− CEO 7% of salary
− CFO 7% of salary
In line with policy
Maximum opportunity:
− CEO: 150% of salary
− CFO: 100% of salary
The Company has deferred its annual pay review to
December 2020 with any pay rises to have effect
from 1 January 2021.
No change
No change
In line with policy
Maximum opportunity:
− CEO: 150% of salary
− CFO: 100% of salary
Performance conditions and weightings:
Performance conditions and weightings:
− 70% adjusted PBT
− 30% strategic and operational objectives
− Weightings and targets of performance conditions
are reviewed annually, as well as personal objectives.
The actual performance targets set will not be
disclosed at the start of the financial year, as they
are considered to be commercially sensitive.
These will be reported and disclosed retrospectively
at the end of the year in order for shareholders to
assess the basis for any bonus outcomes.
No change
The Committee considered the impact on the global
economy of COVID-19, and having taken advice from
PwC, its remuneration advisors, the Committee
resolved to avail itself of the Investment
Association’s recommendation to grant awards in
the 42-day window after it announces its final results
on 8 September 2020, but defer target-setting for six
months from the grant date.
− 70% adjusted PBT
− 30% strategic and operational objectives
See page 80 for details of the performance targets,
their level of achievement and the corresponding
bonus earned by the Executive Directors.
LTIPs (made
through the
EIP)
Maximum opportunity:
− CEO: 175% of salary
− CFO: 125% of salary
Measures and weightings:
Cumulative three-year EPS (40% weighting): EPS
was considered to be an appropriate performance
condition to use for the LTIP given the investment
case made at IPO on earnings growth, and is simple
and well understood by investors.
Average annual ROCE (40% weighting): ROCE
was considered to be an appropriate performance
condition to use to support the strategy of growth,
both organic and through acquisitions, and to focus
on the efficiency by which earnings are generated.
Average cash conversion (20% weighting): Cash
conversion was considered to be an appropriate
performance condition as improving cash conversion
was a key focus of the strategy set out in
the prospectus.
See table at page 80 for details of the performance
conditions and targets.
DWF Group plcAnnual report and financial statements 2020
83
Element
Operation in FY2019/20
Intended operation in FY2020/21
Shareholding
requirements
In line with policy
y
a
p
e
l
b
a
i
r
a
V
Chair and
Non-
Executive
Director fees2
− Chairman: £200,000 pa
− NED base: £65,000 pa
− Senior Independent Director (additional): £10,000
pa
− Committee Chair (additional): £7,500 pa
− Partner Director1: £0pa
Strengthened to require Executive Directors to hold
100% of their pre-cessation shareholding
requirement (or actual shareholding, if lower) for two
years following their cessation of employment.
− Chairman: £170,000 pa
− NED base: £65,000 pa
− Deputy Chairman (additional): £20,000 pa
− Senior Independent Director (additional): £10,000 pa
− Committee Chair (additional): £7,500 pa
− Partner Director1: £0 pa
The Company has deferred its annual fee review to
December 2020 with any fee rises to have effect
from 1 January 2021.
Notes
1. The position of Partner Director is designated by the Board as a Non-Independent, Non-Executive Director position. A Partner Director represents the partners
of DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on the Board. Partner Directors do not receive any fees for the position on
the Board because remuneration is as a member of DWF Law LLP or DWF LLP (determined by his or her ‘home office’, and in some circumstances also by way
of a limited salary as an employee of DWF Connected Services Holdings Limited.
2. In accordance with the Articles of Association of the Company fees paid to Directors shall not exceed in aggregate £2,000,000 per annum.
Illustrations of application of the Remuneration Policy
The graphs below demonstrate Executive Director pay opportunities under the Remuneration Policy approved by shareholders at
the 2019 AGM, and compare them to the single figure for FY2019/20 year on page 79. The single figure includes any actual bonus
payments made during the period. As the first LTIP award was granted in the year, with a three-year performance period, there was
no LTIP vesting during the year, and therefore there is no LTIP element contained in the single figure provided on page 79.
s
0
0
0
’
£
3,500
3,000
2,500
2,000
1,500
500
0
Minimum
Target
Maximum Maximum
Actual
+50% share
price growth
s
0
0
0
’
£
1,600
1,400
1,200
1,000
800
600
400
200
0
Minimum
Target
Maximum Maximum
Actual
+50% share
price growth
Andrew Leaitherland
Chris Stefani
Base salary
Pension
Benefits
Bonus
LTIP
Base salary
Pension
Benefits
Bonus
LTIP
Assumptions for the scenario charts
Element
Minimum
On-target
Maximum
Maximum (plus 50% share price growth)
Fixed pay
− Base salary of £530,000 for CEO and £320,000 for CFO.
− Pension of 7% of salary for CEO and CFO.
Annual bonus1 None
None
LTIPs (made
through the
EIP)2
50% of maximum award
50% of maximum award
100% of maximum award 100% of maximum award
100% of maximum award 100% of maximum award
Notes
1. Maximum annual bonus for the CEO is 150% of salary and for the CFO is 100% of salary.
2. Maximum LTIP award for the CEO is 175% of salary and for the CFO is 125% of salary.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
84
Directors’ Remuneration report continued
Wider workforce remuneration
This section of the Directors’ Remuneration Report provides an overview of remuneration principles and wider workforce
remuneration across the Group including:
− CEO-to-worker pay ratio; and
− UK gender and ethnicity pay-gap reporting.
Remuneration principles and wider workforce remuneration across the Group
Annually, the Committee receives a report on the remuneration principles and wider workforce remuneration across the Group
to enable it to take into account wider workforce pay and practices, and the alignment of incentives and reward with culture,
when setting Executive Director remuneration.
Key areas of the report considered by the Committee include:
− Group remuneration principles;
− grading structure;
− basic pay;
− bonus;
− share plans;
− pension;
− benefits; and
− termination policies.
Group remuneration principles
The table below sets out the Group’s remuneration principles:
Principle
Detail
Competitive
and fair
− Salaries set around market median
− Benefits reflect best practice and workforce needs
Rewarding (the
right) high
performance
Simple to
understand
Supports DWF
values and culture
− Flexibility in share plans to attract and retain key talent
− We are a high-performing business and when we conduct our end of year reviews, we recognise high performers
− We operate an annual performance-review process to ensure we have good performance discussions
− We can recognise those who make outstanding contributions through EIP Exceptional Contributor share awards
− We try to avoid unnecessary complexity
− We provide accessible and relevant information
− Incentives, performance-management and recognition approaches support DWF values and culture
− Benefits support our inclusive culture
Grading structure
DWF has a centralised approach to grading, with all colleagues (Executive Directors, partners and employees) graded from Career
Level 1 to 8. Following acquisitions during the year, a small number of employees and partners are not part of the formal grading
structure. We intend to assimilate them.
Overview of findings
The Group’s workforce has a unique structure, comprising both employees and members of partnerships. The partners, who
represent the principal generators of income for the Group, remain subject to partnership remuneration and benefit arrangements.
Salary
Average salary increases for employees and partners across the Group are being applied on an equitable and objective basis. It is
our policy to increase the salaries of the Executive Directors generally by the same percentage increase as employees and partners
whose roles have not changed during the year.
DWF Group plcAnnual report and financial statements 2020 85
Bonus
The majority of our employees and partners can share in the success of the Company through incentive compensation. In line with
market practice, the level of incentive compensation and whether it is paid solely in cash or in a mixture of cash and deferred shares,
depends on the level of seniority of employee and partners. The incentive approach applied to the Executive Directors aligns with the
wider Group policy on incentives, which is to have a higher percentage of at-risk performance pay with seniority of the role, and to
increase the amount of incentive deferred, provided in equity or measured over the longer term for roles with greater seniority.
Below Board level, for the year ended 30 April 2020 there were two annual bonus plans in place: a Group-wide bonus structure and
a partner bonus:
− Group-wide bonus: Non-partners below Board level were eligible to participate in a Group-wide bonus plan which followed
a similar structure to the Executive Director bonus plan. Performance measures were broadly aligned with those set for Executive
Directors, adjusted appropriately for the individual/team.
− Partner bonus: Partners were eligible to participate in a discretionary bonus plan which was equivalent of up to 5% of annual PBT,
provided in the form of a discretionary bonus plan. Performance measures were broadly aligned with those set for Executive Directors.
No bonuses were paid to employees or partners under these bonus plans for the year ended 30 April 2020.
For FY2020/21, we have implemented a single bonus plan for everyone below Board level including partners which is structured on
a percentage of salary (employees)/total remuneration (partners).
Share plans
Equity participation is offered to all UK employees and partners of the Group through the BAYE scheme, and to senior management
and Executive Directors through the LTIP and Deferred Bonus Plans, each of which involves the award of shares. It is the Group’s
policy to allow employees and partners to share in success by means of equity participation. The Company intends to start to extend
BAYE participation internationally during FY2020/21, where the jurisdictions permit. Executive Directors are required to adhere to
minimum shareholding guidelines.
The IPO gave DWF the opportunity to offer shares to the wider employee group, thus further aligning an element of remuneration
with Company performance, Executive Director remuneration, and the shareholder experience.
On the Company’s Admission to listing, all employees who had been rated ‘fully achieving’ at 31 October 2018 and who were
employed for 12 months at the date of Admission and not serving notice (known as qualifying colleagues), were awarded IPO awards
under DWF’s BAYE scheme. Each IPO allocation was valued (at Admission) at up to 18% of salary. Qualifying colleagues were also
awarded a cash bonus on Admission, with a value of up to 2% of salary. The IPO allocations were made as allocations of free shares
that vest in two equal tranches on the preliminary announcements of the Group’s financial results for the financial years ending 30 April
2020 and 30 April 2021, subject to the participant remaining in employment (unless the participant is deemed a ‘good leaver’).
The BAYE continues to operate on an annual basis. All qualifying colleagues are invited to participate in the BAYE scheme by
acquiring ordinary shares out of deductions from salary, and awarded matching shares in respect of ordinary shares acquired.
Each year, all qualifying colleagues will be invited to sign up to buy shares over a 12-month investment period. Matching shares are
received on a one-for-two basis, so for every two shares purchased over the 12-month investment period, participants receive one
matching share three years from the start of the relevant 12-month investment period subject to certain conditions.
The EIP is in operation for partners and senior employees and offers a number of awards such as promotion awards, lateral hire
awards and exceptional contributor awards. These plans are based on a 5-year vesting schedule and are designed to enable the
business to attract and retain the right talent for the future sustainability of the Group.
The Group has a Deferred Bonus Plan although there have been no awards made through that plan to date.
Pensions
All UK employees are eligible for enrolment in a Company defined-contribution pension arrangement. The current employee
contribution is 3-5% of salary and employer contribution is 5-7% of salary. The contribution for Executive Directors is 7% of salary,
in line with the pension contributions applicable to the wider UK workforce. Outside of the UK, pension arrangements for
employees are in line with local legal requirements.
Benefits
UK employees and partners are offered a range of benefits including life assurance and health insurance, and flexible benefits
by way of salary sacrifice. Elsewhere in the Group, benefits are in line with local market practice.
Termination
An employee or partner must be in employment and not serving notice to be eligible for any bonus payment. The treatment
of leavers is governed by the respective share plan rules, agreed leaver status delegated authorities and operating guidelines.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 86
Directors’ Remuneration report continued
The following table shows the cascade of incentives throughout the Group:
Career Level
Executive Directors
CL1
(excluding Executive
Directors)
CL2
CL3
CL4
CL5
CL6
CL7
CL8
Average annual
increase
in base salary
Maximum bonus
opportunity
Participation in LTIP
(made through the EIP)
Participation in other
plans under the EIP
Participation in all
employee equity plans
(BAYE) – UK only
0%
3%
2.92%
2.66%
3.01%
4.91%
2.38%
3.13%
2.22%
CEO: 150%
of salary
CFO: 100%
of salary
15%
10%
7.5%
5%
3%
CEO: 175%
of salary
CFO: 125%
of salary
Executive Board
Members
Executive Board
Members
NA
NA
NA
NA
Yes
Qualifying
Colleagues
Qualifying
Colleagues
NA
Qualifying
Colleagues
Yes
Yes
Yes
Yes
Yes
Yes
In summary, the Committee is satisfied that the approach to remuneration across the Company is consistent with the Group’s
principles of remuneration. In the Committee’s opinion, the approach to Executive Director remuneration aligns with the wider
Group remuneration principles, and there are no anomalies specific to the Executive Directors.
Communication and engagement with employees and partners
The Board is committed to ensuring there is an open dialogue with our employees and partners over various decisions. This year,
Chris Sullivan has been the designated Non-Executive Director with oversight of employee engagement. Chris, along with other Board
members, has attended various formal and informal people-related events, and meets the business directly through briefings at key
points during the year. At these briefings, employees and partners can ask questions about the Group and our People Strategy.
The Partner Director is a representative of the partners, a constituent part of our workforce, responsible for reflecting the views of
partners to the Board and for consulting partners on important matters, which he has done through both formal and informal channels
during the year. The business is kept informed of the Group activities and performance through communications and the circulation of
corporate announcements. This is supplemented by updates on Rubix, our intranet, to which all Non-Executive Directors have access.
There are two main committees for employee and partner engagement:
− The Engaging People Executive (‘EPE’), created to ensure employee engagement. It is chaired by a member of the Executive
Board of DWF Law LLP or DWF LLP, and made up of partners and senior employees across the business.
− The Employee Forum, chaired by the Head of HR Shared Services, and made up of employees at different career levels to those on
the EPE, to provide alternative opportunities to obtain the employee voice and showcase employee initiatives and communications.
Additionally, we have created sub-committees chaired by members of the Executive Board of DWF Law LLP or DWF LLP, whose
membership comprises employees and partners looking at specific areas such as CSR and our Diversity & Inclusion agenda (further
details are set out on page 56).
This section of the Remuneration Committee report is presented to these committees for employee and partner engagement.
Members are given an opportunity to ask the Chair of the Remuneration Committee questions on it.
The business engages with every career level to recognise key contributors through our Achievers platform, which also supports our
employee and partner engagement Pulse Survey, which occurs every six months. This process includes prompts for line managers
to improve points raised in the surveys.
To ensure all employees and partners are well informed about company matters, a weekly newsletter is sent to all employees and
partners, as well as Group news and updates shared on Rubix, our intranet.
CEO to worker pay ratio
CEO-to-worker pay ratio as at 30 April 2020
DWF is committed to fairness and equality across the Group, and takes the CEO pay ratio, alongside a number of other factors,
into consideration when reviewing pay levels across the Group.
DWF Group plcAnnual report and financial statements 2020 87
To calculate the CEO pay ratio, DWF used prescribed methodology A to calculate the pay and benefits of all UK employees (including
partners) on a full-time equivalent (‘FTE’) basis for the financial year, to identify the quartiles. The pay and benefits for all UK employees
and partners for the relevant financial year is calculated and ranked from lowest to highest, to identify the employees and partners at
P25, P50 and P75. We chose methodology A as we felt it comprehensively reflects the pay levels of our employees (including partners).
The salary and total remuneration of UK FTE employees (including partners) at the 25th, 50th and 75th percentile, and the ratios
between the CEO and these employees (including partners) are shown in the table below.
Year
Methodology
2019 amount
2019 ratio
A
A
P25
£23,000
23:1
Salary
P50
£36,445
15:1
Total remuneration
P75
£59,400
9:1
P25
£24,383
24:1
P50
£39,088
15:1
P75
£64,487
9:1
Explanatory notes
1. As the business is in its second year since IPO, no LTIPs have vested and the figures above therefore use like-for-like calculations.
2. No CEO pay ratio is provided for 2018, as the pay ratio regulations which came into force on 1 January 2019 require annual disclosures to be made from the end
of 2019 onwards. We have not included a comparison to 2018/19 as the business only listed in the last two months of that financial year, and the business model
in place prior to the listing was a private-limited-liability partnership, so remuneration is not comparable.
The Company believes the median pay ratio for FY2019/20 is consistent with the pay, reward and progression policies for the
Company’s UK employees (and partners). We complete a rigorous pay and benchmarking exercise annually on all roles, and adjust
appropriately based on performance and affordability, to ensure employees (and partners) are remunerated fairly and in line with the
Company’s pay philosophy.
In assessing our pay ratio versus likely ratios from industry peers, we believe we are towards the lower end of the range but note
that annual and long-term incentive payments have varied considerably amongst this group. In our case, the CEO single figure
comprises fixed pay, taxable benefits, and pension benefits, given that no bonus was paid and no long-term incentive vested in
respect of performance in FY2019/20. We also recognise that ratios will be influenced by levels of employee (and partner) pay,
which may vary from other sectors.
Over time, we expect there may be significant volatility in this ratio, and believe this will be caused by the following:
− Our CEO pay is made up of a higher proportion of incentive pay than that of our employees (and partners), in line with the
expectations of our shareholders. This introduces a higher degree of variability in CEO pay each year, which affects the ratio.
− The value of long-term incentives is disclosed in the year of vesting (after three years), which increases the CEO pay in that year,
again affecting the ratio for that year.
− Long-term incentives are provided in shares, and therefore an increase in share price over the three years magnifies the impact
of a long-term incentive award vesting in a year.
− We recognise that the ratio is affected by the different structure of the pay of our CEO to that of our employees (and partners),
as well as the make-up of our workforce. This ratio varies between businesses even in the same sector. What is important from
our perspective is that this ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the
CEO and wider workforce. Where the structure of remuneration is similar, as for the Executive Board and the CEO, the ratio is
likely to be much more stable over time.
Performance against Total Shareholder Return (‘TSR’)
The following chart illustrates the Company’s TSR performance (share price growth plus dividends paid) from the date of Admission
against the performance of the FTSE All Share Support Services, a broad-based index the Company has been a constituent member
of since Admission.
Performance against Total Shareholder Return ('TSR')
140
130
120
110
100
90
80
70
60
50
40
Mar Apr May
2019
Jun
Jul
Aug Sep Oct Nov Dec Jan Feb
Mar
Apr
2020
DWF
FTSE All Share Support Services
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 88
Directors’ Remuneration report continued
Historic CEO remuneration
Element
Total remuneration
Annual Bonus as a % opportunity
LTIP as a % opportunity
FY2018/191
FY2019/20
£70,949
0%
NA
£530,000
0%
NA
Note
1. For FY2018/19, the table reflects the period from Admission on 15 March 2019 to the end of the financial year on 30 April 2019. We have not included an
annualised comparison figure for FY2018/19 as the business only listed in the last two months of that financial year, and the business model in place prior to the
listing was a private-limited-liability partnership, so remuneration is not comparable.
Percentage change in remuneration of the Directors and all employees and partners
£ Salary/fees
£ Taxable benefits2
£ Bonus4
FY
2019/203
2018/191
change
2019/20
2018/19
change
2019/20
2018/19
change
Executive Directors
Andrew Leaitherland (CEO)
Chris Stefani (CFO)
Non-Executive Director
Sir Nigel Knowles
Luke Savage
Tea Colaianni
Vinodka Murria
Chris Sullivan
Samantha Tymms
Matthew Doughty5
Average employee
(includes partners)
530,000
320,000
530,000
320,000
0%
0%
6,677
5,368
14,917
8,760
-55%
-39%
200,000 200,000
72,500
72,500
65,000
75,000
72,500
0
48,626
72,500
72,500
65,000
75,000
72,500
0
50,330
0%
0%
0%
0%
0%
0%
0%
3.5%
0
0
0
0
0
0
0
732
0
0
0
0
0
0
0
732
0%
0%
0%
0%
0%
0%
0%
0%
0
0
0
0
0
0
0
0
0
358
0
0
0
0
0
0
0
0
0
868
0%
0%
0%
0%
0%
0%
0%
0%
0%
-58%
Notes
1. For FY2018/19, for the purposes of calculating the percentage change in remuneration we have annualised the Salary/fees received during the period from
Admission on 15 March 2019 to the end of the financial year on 30 April 2019.
2. The reduction in taxable benefit costs from FY2018/19 to FY2019/20 is due to changes agreed to partner and executive benefits, specifically permanent health
insurance which was reduced from 75% to 50% of earnings and Life Insurance from flat £1m to 4 x Salary or a maximum £1m cap. These changes significantly
reduced the cost of our insurance in the Group and this is shown in the table above.
3. For FY2019/20, the additional fees for Committee Chairs or the position of Senior Independent Director are included in the Salary/Fees column of the table on
page 79. In FY2018/19, these fees were included in the ‘Other’ column. You can find further details on page 83.
4. In FY2018/19, a bonus was paid at IPO to all employees with eligible service. This was equivalent to 2% of salary. This is the reason for the percentage change in
the average employee (includes partners) bonus.
5. The position of Partner Director is designated by the Board as a Non-independent, Non-Executive Director position. A Partner Director represents the partners
of DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on the Board. Partner Directors do not receive any fees for the position on
the Board because remuneration is as a member of DWF Law LLP or DWF LLP (determined by his or her ‘home office’, and in some circumstances also by way
of a limited salary as an employee of DWF Connected Services Holdings Limited.
The Committee uses this information to satisfy itself that there is not an increasing gap between the level of fixed pay for the
Director and for employees (including partners). Based on the above analysis, the Committee is satisfied that this is the case.
UK gender and ethnicity pay-gap reporting
We reported on our UK gender pay gap for 2019 in April of this year.
The Group’s UK gender pay gap
Pay gap1
Mean hourly pay gap
Median hourly pay gap
Mean bonus pay gap
Median bonus pay gap
2017
50%
36%
51%
32%
2018
48%
32%
45%
23%
2019
39%
33%
37%
35%
Note
1. The figures above are combined figures for both employees and self-employed partners. For both hourly pay rates have been used.
The full 2019 Gender Pay Gap Report is available on our website at dwfgroup.com.
While we are working hard to speed up the pace of change in our business, there is a gender pay gap due to the fact that we
have more men at senior levels in higher-paid roles. We are taking targeted and sustained action where there is currently under-
representation, and we are making positive progress. We know that changing decades of imbalance in our business and sector
is going to take time, but we are committed to addressing it.
DWF Group plcAnnual report and financial statements 2020 89
Our latest plan sets out our immediate priorities and you can find more details on this on pages 37 and 38. This sustained focus on
meaningful actions will result in a more diverse workforce, supported and empowered through our inclusive culture and values.
Ethnicity pay-gap reporting
As part of our wider inclusion approach, we have worked hard over the past year to build a more accurate picture of our Black, Asian
and Minority Ethnic (‘BAME’) population. However, the current proportion of colleagues who have disclosed their ethnicity remains
low at 60% and, as yet, does not allow for meaningful comparison as part of our 2019 Pay Gap Report.
As described on pages 62 and 63, we have a number of strategies to ensure we are as transparent as possible. In particular, our
Board has sent a strong signal about the value of diverse talent and inclusion by setting diversity targets at senior levels, and BAME
targets in addition to our gender targets, which include a deadline to initiate BAME pay-gap reporting by the end of 2020.
Annual Report on Remuneration
The following table sets out where in the Remuneration Report the information can be found or where it is not relevant a statement
to that effect:
Information
Single figure of remuneration for each Executive Director
Share interests awarded during FY2019/20
Payment to past Directors
Statement of Directors’ shareholding and share interests
Percentage change in remuneration of Directors and all employees (including partners)
Pay ratio information in relation to the total remuneration of the Director undertaking the role of the CEO
Statement of the Implementation of the Remuneration Policy in FY2020/21
Consideration of matters relating to Directors’ remuneration
Statement of voting at General Meeting
Page
79
80
91
90
88
86 and 87
82 and 83
76 and 77
91
Relative importance of spend on pay
The table below shows the percentage change in total salary costs and shareholder distributions (i.e. dividends) from the financial
year ended 30 April 2019 to the financial year ended 30 April 2020.
Shareholder distributions paid in the year
Total remuneration cost1
FY2018/19 £m
FY2019/20 £m
nil
126.4
9.8
212.2
change
NA
68%
Notes
1. Total remuneration cost is defined in note 28 of the financial statements. The large increase year on year reflects the change in compensations model that came
into effect in March 2019.
Details of 2019 LTIP Grant
Details of the performance conditions and targets of the 2019 LTIP Grant are set out on page 80 in the Remuneration Outcomes
at a Glance section of this report.
No Executive Directors’ share incentives vested during the year and therefore the Committee did not consider whether any
adjustment should be made in respect of share price performance or otherwise.
Details of strategic and operational objectives for FY2019/20
During the year, the Committee approved performance conditions for Executive Directors in relation to their bonuses for FY19/20
as follows:
− 70% Adjusted PBT
− 30% Strategic and operational objectives (including improved gross lock-up).
For more detail on these performance conditions, see page 80 in Remuneration Outcomes for FY2019/20 – At a Glance.
The strategic and operational objectives are made up of a lock-up objective and a number of personal weighted objectives for
specific matters to be achieved during the financial year to safeguard the business and contribute to, or form, the essential financial
and strategic priorities and outcomes. We outline the key major themes of the objectives and their corresponding performance on
page 90.
The Committee noted that these had been partially achieved, as described below. The Committee decided that as the Adjusted PBT
and lock-up performance conditions had not been met, it would not be appropriate to make any payment.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
90
Directors’ Remuneration report continued
Market expansion
(33% weighting)
People
(33% weighting)
Business growth
(33% weighting)
Executive Directors
CEO Andrew
Leaitherland
Development and monitoring
of various market performance
measures such as Net Promoter
Score progressed.
Revenues from key clients
have grown.
CEO attainment
CFO Chris Stefani
NA1
Significant developments
have been made through
improved technology and
management Information.
CFO attainment
Partially achieved
There was a net partner
headcount increase of 19%.
People-performance initiatives in
FY2019/20 have brought a marked
improvement in performance
planning and assessments, and
our engagement score is up.
NA1
The Finance function has continued
to develop its integrated service
to the business. This has enabled
improved partner engagement and
focus on financial fundamentals.
Cost to income ratio has reduced
by 0.1 ppts from 42.7% to 42.6%.
The focus on improving lock-up
has been underpinned by the roll
out of 3e.
Partially achieved
Positive outcomes have been
achieved with significant M&A
activities, in particular the
acquisition of Mindcrest in the
USA and India, and RCD in Spain.
NA1
Finance cost reduction and budget
were achieved.
Managed Services established
as a separate business unit and
enhanced with the acquisition
of Mindcrest.
Partially achieved
Notes
1. As announced on 29 May 2020, when Andrew Leaitherland stepped down as Group Chief Executive Officer, the Remuneration Committee determined he would
receive no bonus for the financial year 2020.
Directors’ share interests (audited)
The Directors’ interests in shares as at 30 April 2020 are provided below.
Executive Directors
Andrew Leaitherland (CEO)
Chris Stefani (CFO)
Non-Executive Directors
Sir Nigel Knowles
Luke Savage
Tea Colaianni
Vinodka Murria
Chris Sullivan
Samantha Tymms
Matthew Doughty
Number of
shares
beneficially
owned3
Value of shares
beneficially
owned as a %
salary/fees1
Shareholding
guidelines Deferred shares
Shares subject
to performance
conditions
Total interest
in shares
7,067,628
1,125,0512
1,080%
370%
250%
200%
2,662,211
32,693
49,180
1,586,306
409,836
0
2,654,421
NA
NA
NA
NA
NA
NA
NA4
NA
NA
NA
NA
NA
NA
NA4
0
0
NA
NA
NA
NA
NA
NA
NA4
779,411
336,134
7,847,039
1,461,185
NA
NA
NA
NA
NA
NA
NA4
2,662,211
32,693
49,180
1,586,306
409,836
0
2,654,421
Notes
1. Calculated using the share price of £0.81 on 30 April 2020.
2. The one-off award made to Chris Stefani at the time of the IPO as described on page 77 of the annual report and financial statements 2019 is included here.
The one-off IPO award was granted to him to create an equity interest at IPO equivalent to what he would have received at IPO if he had been capable of being
a member of DWF LLP under the regulations applicable to DWF LLP.
3. On 9 July 2020, Chris Stefani, Sir Nigel Knowles and Matthew Doughty acquired a further 15,000 shares each.
4. Matthew Doughty is a Partner Director. The position of Partner Director is designated by the Board as a Non-independent, Non-Executive Director position.
A Partner Director represents the partners of DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on the Board. Partner Directors
do not receive any fees for the position on the Board because remuneration is as a member of DWF Law LLP or DWF LLP (determined by his or her ‘home office’,
and in some circumstances also by way of a limited salary as an employee of DWF Connected Services Holdings Limited.
Service contracts or letters of appointment
The table on the next page provides details of the service contracts or letters of appointment for the Directors. All service contracts
and letters of appointment are available for viewing at the Company’s registered office. In line with best practice, all Directors are
subject to annual re-election at the Company’s AGM. The Chairman and the Independent Non-Executive Directors are appointed
subject to re-appointment at the AGM for an initial term of three years commencing on the admission of the shares to trading on
the London Stock Exchange. The initial period of three years is renewable by one additional period of three years and renewable
thereafter at the discretion of the Company. Partner Director letters of appointment provide that their duties as a Director are subject
to their professional duties as solicitors authorised by the SRA or equivalent regulatory authority.
DWF Group plcAnnual report and financial statements 2020 Date appointed
Expiry date
Executive Directors
Andrew Leaitherland
10 September 2018
Chris Stefani
Non-Executive Directors
Sir Nigel Knowles
10 September 2018
1 November 2018
Chris Sullivan
1 November 2018
Tea Colaianni
1 November 2018
Vinodka Murria, OBE
1 November 2018
Luke Savage
1 November 2018
Samantha Tymms
1 December 2018
Matthew Doughty
1 December 2018
Rolling service-contract with no fixed expiry date. For his role
as Partner Director during part of the year, there was no
entitlement to receive a fee for undertaking the role.
Rolling service-contract with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for an initial term of three years
with no fixed expiry date
Rolling letter of appointment for role as Partner Director on
Admission, for an initial term of three years. The Partner
Director is not entitled to receive a fee for undertaking the role.
91
Notice period
by Company
or Director
12 months
12 months
3 months
1 month
1 month
1 month
1 month
1 month
1 month
Payments to past Directors/payments for loss of office (audited)
There were no payments to past Directors or payments for loss of office during the financial year. However, the Company agreed terms
with Andrew Leaitherland on his cessation of employment on 29 May 2020.
The full details of those terms are set out in the announcement which is available on the Company’s website (dwfgroup.com/en/investors/
reports-and-presentations) but is summarised below:
1. Andrew is receiving 12 monthly payments including basic salary, pension entitlements and other contractual benefits, in lieu of the
12-month contractual notice period in accordance with the provisions of his service agreement. Andrew is required to mitigate his loss
during the notice period by seeking alternative employment or engagement.
2. Andrew will not receive any bonus for the financial year ended 30 April 2020.
3. Awards made to Andrew under the Long-Term Incentive Plan granted in 2019 lapsed on his departure. Andrew held no other incentive
awards and no further incentive awards will be made.
4. Following the Company’s IPO in April 2019, Andrew Leaitherland (together with his wife and family trust) held a total of 7,067,628 ordinary
shares in the Company, which represented Andrew’s pre-IPO ownership interest in the DWF business. These shares are subject to
a five-year lock-up period (which is considerably longer than a typical post-IPO lock-up period of 12 months). These shares would normally
have been released in equal tranches on the announcement of the preliminary results for the financial years ended 30 April 2020, 2021,
2022, 2023 and 2024 under the terms of a lock-up agreement entered into between the Company and Andrew Leaitherland at the time
of IPO. Pursuant to this lock-up agreement, the first tranche of shares (20%) is released on announcement of the preliminary results for
the financial year ended 30 April 2020, and the second tranche (20%) is due to be released during Andrew’s 12-month notice period.
The Board determined that 50% of the remaining tranches be retained by Andrew in recognition of his contribution to the business during
his tenure in office and these will be released in accordance with the original schedule (in 2022, 2023 and 2024). The Board determined
that the other 50% be clawed back immediately into the Company’s Employee Benefit Trust in accordance with the terms of the lock-up
agreement. The release of each tranche of the retained Shares is also subject to malus provisions.
Shareholder voting at the 2019 AGM
Votes for
% for
Votes against
% against
Total votes
validly cast
Votes withheld
To approve the Directors’ Remuneration Policy
To approve the Directors’ Remuneration report
106,935,200
106,665,782
98.99
98.74
1,091,112
1,360,530
1.01 108,026,312
1.26 108,026,312
0
0
We appreciate shareholders’ overwhelming support for both our Remuneration Policy and Remuneration report, and are keen to take
on board any additional feedback raised. Following the publication of our 2019 Directors’ Remuneration report, we have increased the
post-cessation shareholding required to 100% of an Executive’s minimum shareholding requirement (or the actual shareholding at the
cessation of employment, if lower) for the two years following cessation of employment, in line with the Investment Association’s
Principles of Remuneration.
Approved by the Board on 7 September 2020
Tea Colaianni
Chair, Remuneration Committee
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 92
Directors’ report
The Directors’ report, together with the Strategic report on pages 1 to 49, form the Management Report for the purposes of the
Disclosure, Guidance and Transparency Rule 4.1.5R.
Statutory or regulatory information contained elsewhere in the Annual Report
Information required to be disclosed in the Directors’ report may be found below and in the following sections of the Annual Report:
Information
Section
Directors’ details (including changes made during the year)
Corporate Governance report
Directors’ interests and that of their families
Directors’ Remuneration report
Consolidated financial statements
142 and 143
Strategic report
Strategic report
Strategic report
Likely future developments in the business
Risk factors and principal risks; going concern and viability
statements
Governance arrangements; human rights and anti-corruption
and bribery matters
Financial instruments: information on the Group’s financial
instruments and risk management objectives and policies,
including our policy on hedging
Sustainability
Corporate social responsibility
Financial risk management
Employee engagement
Strategic report
Strategic report
Consolidated financial statements
Strategic report
Corporate Governance report
Directors’ Remuneration report
Energy consumption, energy efficiency and Greenhouse
Gas emissions
Engagement with suppliers, customers and others
Section 172(1) statement
Strategic report
Directors’ report
Strategic report
Strategic report
Disclosure table pursuant to Listing Rule 9.4.8C
The following table provides references to where the information required by Listing Rule 9.4.8C is disclosed:
Page
52 to 63
90
8 and 9
45 to 49
36 to 43
36 to 43
36 to 43
142 and 143
38 to 40
62
86
43
95
16, 17 and 41
14
Page
Not applicable
Not applicable
Listing Rule
Listing Rule requirement
9.8.4(1)
Interest capitalised by the Group and any related tax relief
9.8.4(2)
Unaudited financial information (LR 9.2.18R)
9.8.4(4)
Long-term incentive schemes
9.8.4(5)
Directors’ waiver of emoluments
9.8.4(6)
Directors’ waiver of future emoluments
9.8.4(7)
Non pre-emptive issues of equity for cash
9.8.4(8)
Non pre-emptive issues of equity for cash by any unlisted major subsidiary
undertaking
9.8.4(9)
Parent Company participation in a placing by a listed subsidiary
9.8.4(10) Contract of significance in which a Director is or was materially interested
9.8.4(11) Contract of significance between the Company (or one of its subsidiaries)
and a controlling shareholder
9.8.4(12) Waiver of dividends by a shareholder
9.8.4(13) Waiver of future dividend by a shareholder
9.8.4(14) Board statement in respect of a relationship with the controlling shareholder
Directors’ Remuneration report, 73 to 91
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Directors’ report page 93
Directors’ report page 93
Not applicable
DWF Group plcAnnual report and financial statements 2020 93
Directors’ indemnities and insurance
At the date of this Annual Report, indemnities are in force under
which the Company has agreed to indemnify the Directors, to
the extent permitted by law and the Articles of Association, in
respect of any liability arising out of, or in connection with, the
execution of their powers, duties and responsibilities, as
Directors of the Company or any of its subsidiaries.
The Company also maintains directors’ and officers’ liability
insurance as provided for in the Articles. The Directors may also
obtain, at the Company’s expense, external legal or professional
advice necessary to enable them to carry out their duties.
Dividends
The Board has declared the following dividends:
− an interim dividend of 1.25 pence per ordinary share, paid on
20 December 2019
− an interim dividend of 1.25 pence per ordinary share, paid on
21 February 2020
− a final dividend of 0.75 pence per ordinary share, subject to
shareholder approval at this year’s AGM, which will be paid
on 5 November 2020 to all shareholders on the register of
members at the close of business on 25 September 2020.
There are no guarantees that the Company will pay dividends,
or the level of any such dividends in the future.
Waiver of dividends – Listing Rule 9.8.4
The Estera Trust (Jersey) Limited, which recently merged with
Ocorian Limited, is trustee of the DWF Group plc Employee
Benefit Trust and the DWF Group plc Reward Share Trust.
The Employee Benefit Trust and the Reward Share Trust are used
in connection with the DWF Group plc Equity Incentive Plan, the
DWF Group plc Deferred Bonus Plan, the DWF Group plc Buy
As You Earn Plan, both in the UK and for international locations,
the DWF LLP Sub Group Equity Incentive Plan, the DWF LLP
sub Group Deferred Bonus Plan, and the DWF LLP Sub Group
Buy As You Earn Plan. The Estera Trust has agreed to waive
dividend on shares in the trust not allocated to plan members.
A shareholder who is a member of DWF Law LLP and DWF LLP
has agreed to waive dividends attaching to shares which were
erroneously transferred to them.
Substantial shareholdings
At 20 April 2020, the last practicable date prior to the end of
FY2019/20, the Company had been notified in accordance with
Rule 5 of the Disclosure, Guidance and Transparency Rules or
was otherwise aware, of the following interests in the
Company’s voting rights:
Holder
Estera Trust (Jersey) Limited as
trustee of the DWF Group plc
Employee Benefit Trust
Premier Miton Group
Standard Life Aberdeen
Sand Grove Capital Management
Number of
ordinary shares
26,765,635
% of issued
capital
8.25
23,481,692
14,612,788
13,770,793
7.24
4.50
4.24
The percentage of voting rights detailed above was calculated as
at 20 April 2020, in accordance with Rule 5 of the Disclosure,
Guidance and Transparency Rules.
At 27 August 2020, the latest practicable date prior to
publication of this Annual Report, the Company had been
notified in accordance with Rule 5 of the Disclosure, Guidance
and Transparency Rules or was otherwise aware, of the
following interests in the Company’s voting rights:
Holder
Estera Trust (Jersey) Limited as
trustee of the DWF Group plc
Employee Benefit Trust
Premier Miton Investors
Aberdeen Standard Investments
Sand Grove Capital Management
Number of
ordinary shares
34,287,799
% of issued
capital
10.56
22,161,660
14,612,788
13,770,793
6.83
4.50
4.24
The percentage of voting rights detailed above was calculated as
at 27 August 2020, in accordance with Rule 5 of the Disclosure,
Guidance and Transparency Rules.
Share capital structure and share rights
Further details of the share capital are shown in note 23 to
the consolidated financial statements, which forms part of this
Directors’ report. Rights attributable to the Company’s ordinary
shares are as set out in the Company’s Articles of Association
(which are available on our website at dwfgroup.com/en/
investors) and in applicable company law. Holders of the
Company’s ordinary shares have the right to attend, speak and
vote (either in person or by proxy) at a general meeting of the
Company, and the right to benefit in any distribution of the
Company, which includes, but is not limited to, dividends.
No shareholder owns shares with special rights as to control.
The Company operates a number of employee share plans,
which are detailed both in the Directors’ Remuneration report on
page 85 and in note 25 to the consolidated financial statements.
The voting rights of shares held in trust for the share plan
participants, as beneficial holders, are exercised at the direction
of the participant. In respect to any voting rights of shares held
in trust that are not allocated to share plan participants, Estera
Trust (Jersey) Limited will abstain from voting these shares,
unless directed otherwise by the Company, and then only in
accordance with Estera Trust (Jersey) Limited’s discretion.
Authority to allot and purchase own shares
The Company was authorised by shareholders at the AGM held
in September 2019 to purchase its own ordinary shares in the
market, up to a maximum of 30,000,000. During the year, no
ordinary shares were repurchased.
At the same AGM, the Directors were also granted authority
(for the purposes of section 551 of the Companies Act 2006)
to allot relevant securities (i) up to an aggregate nominal amount
of £1,000,000; and (ii) comprising equity securities (as defined
in the Companies Act 2006) up to an aggregate nominal amount
of £2,000,000 (after deducting from such limit any relevant
securities issued under (i) in connection with a rights issue).
These amounts will apply until the conclusion of the AGM to
be held on 21 October 2020.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 94
Directors’ report continued
The Directors confirm their intention to renew these
authorities at the forthcoming AGM, ensuring adherence to
the provisions of the Pre-Emption Group’s (‘PEG’) revised
Statement of Principles. Further details are set out in the
Notice of Annual General Meeting, which you can find on
dwfgroup.com/en/investors.
The Directors also confirm their intention to continue to adhere
to the PEG Statement of Principles and only allot shares
representing more than 5% of the issued share capital of the
Company (excluding treasury shares) for cash, where that
allotment is in connection with an acquisition or a specified
capital investment. Such an acquisition or investment would be
announced at the same time as the allotment, or having taken
place in the preceding six months and being referred to in the
announcement of the issue.
Change of control – significant agreements
There are a number of agreements that take effect, alter or
terminate upon a change of control of the Company, including
following a takeover bid, such as supplier and service provider
agreements and property lease arrangements. The legal risk
arising out of such change of control is closely managed by
the Company as part of its contractual governance processes.
The Company has an unsecured £80.0m multicurrency revolving
loan facility agreement with HSBC UK Bank plc, National
Westminster Bank plc and Lloyds Bank plc for general corporate
and working capital purposes. If there is a change of control of
the Company, any lender, by not less than 30 days’ notice to the
Company, may cancel its commitment under the facility and
declare the outstanding utilisation of that lender’s commitment
(together with accrued interest) immediately due and payable.
The Company has a secondary unsecured £15.0m multicurrency
revolving loan facility with HSBC UK Bank plc and National
Westminster Bank plc. The secondary facility operates under
the same terms as the unsecured multicurrency revolving loan
facility as referred to above.
Australian subsidiaries of the Company are funded by a revolving
facility of $3,000,000 (Australian dollars), and associated capital
facilities, from Westpac Banking Corporation. Under the terms
of that agreement, where there is, in the lender’s opinion,
a substantial change (direct or indirect) in management,
ownership or control, it may constitute an event of default
under that agreement, requiring amounts outstanding and
interest to become payable immediately.
The Company’s subsidiary, Rousaud Costas Duran SLP, has
unsecured multicurrency revolving loan facilities agreements
with several local banks for general corporate and working
capital purposes. The total value of all such facilities is €12.3m.
If there is a change of control of the Company, any lender
may cancel its commitment under the facility and declare the
outstanding utilisation of that lender’s commitment (together
with accrued interest) immediately due and payable.
In the event of a change of control, the facilities referred
to above would either require repayment or renegotiation.
Further details on banking facilities are set out in note 19
to the consolidated financial statements on page 141.
The Directors are not aware of any agreements between the
Company and its Directors or employees which would pay
compensation in the event of a change of control. The rules
of the Company’s share plans generally provide for accelerated
vesting or release of the share awards in the event of a change
of control of the Company.
Restrictions on transfer
As part of the Group, DWF Law LLP, is regulated by the
Solicitors Regulation Authority (‘SRA’), the Company and
shareholders are subject to statutory ownership restrictions
pursuant to the Legal Services Act 2007.
It is a cardinal principle of the Company that a ‘Non-authorised
Person’ shall not hold, nor take steps to acquire, any ‘Restricted
Interest’ in the Company other than in compliance with the
Legal Services Act 2007 and the arrangements, rules and
regulations of any ‘Relevant Licensing Authority’, which includes
the SRA and, where applicable, other designated regulators
of the legal professions in England and Wales.
A Non-authorised Person includes any person who is not
approved to carry on legal activities by the SRA or another
Relevant Licensing Authority.
A Restricted Interest in the Company exists where a person
(alone or with their associates):
a) holds at least 10% of the shares in the Company
b) is able to exercise significant influence over the management
of the Company by virtue of their shareholding in the Company
c) is entitled to exercise, or control the exercise, voting power in
the Company which, if it consists of voting rights, constitutes
at least 10% of the voting rights in the Company
d) is able to exercise significant influence over the management
of the Company by virtue of the person’s entitlement to
exercise, or control the exercise of, voting rights in
the Company.
If a member (or prospective member) who is a Non-authorised
Person proposes to acquire a Restricted Interest in the
Company, that member (or prospective member) shall not take
any steps to acquire such Restricted Interest until after it has:
a) notified the Company and the Relevant Licensing Authority
in advance of its proposal to acquire such Restricted Interest
b) received the necessary approvals from the Relevant Licensing
Authority, as may be required under the Legal Services Act
2007 and Regulatory Arrangements.
It is a criminal offence under the Legal Services Act 2007 for
a Non-authorised Person to fail to comply with these obligations.
If the Company believes the Divestiture Condition may be
satisfied in relation to a Non-authorised Person (a ‘Defaulting
Person’), the Company may give notice to the Defaulting Person
that all of the restrictions referred to below shall apply to all
of that Non-authorised Person’s shares in the Company
(the ‘Relevant Shares’):
DWF Group plcAnnual report and financial statements 2020 95
a) subject to a compulsory disposal provision set out below,
a transfer of or agreement to transfer the Relevant Shares, or
in the case of unissued shares, the transfer of (or agreement
to transfer) the right to be issued with them, is void
b) no voting rights are to be exercisable in respect of the
Relevant Shares
c) no further shares are to be issued in right of the Relevant
Shares or in pursuance of any offer made to their holder
d) except in liquidation, no payment is to be made of any sums
due from the Company on the Relevant Shares whether in
respect of capital or otherwise
e) any restriction the SRA or Relevant Licensing Authority may
impose in respect of the Relevant Shares in accordance with
the Legal Services Act 2007.
A Divestiture Condition includes where a Non-authorised Person
holds a Restricted Interest in the Company by virtue of holding
shares in the Company in any of the following circumstances:
a) as a result of the person taking a step in circumstances that
constitutes an offence under paragraph 24(1) of Schedule 13
to the Legal Services Act 2007 (whether or not the person
is charged with, or convicted of, an offence under
that paragraph)
b) in breach of conditions imposed under paragraph 17, 28, or
33 of Schedule 13 to the Legal Services Act 2007
c) in contravention of an objection by the Relevant Licensing
Authority under paragraph 31 or 36 of Schedule 13 to the
Legal Services Act 2007.
For so long as the restrictions set out above apply to a Defaulting
Person, the Company may (in its absolute discretion) notify the
Defaulting Person that, within seven days of the date of service
of the notice, they must dispose of such number of their shares
representing the Relevant Shares in the Company that will result
in the Defaulting Person no longer holding a Restricted Interest
in the Company (the ‘Disposal Shares’).
If the Defaulting Person does not dispose of the Disposal
Shares, the Company shall arrange to sell the Disposal Shares
as soon as is reasonably practicable. The Company shall not be
liable to the Defaulting Person for any alleged deficiency in the
amount of sale proceeds in respect of, or any other matter
relating to, the Disposal Shares. The Company may make any
arrangements it deems necessary or desirable to sell the
Disposal Shares. The Defaulting Person will receive the net
proceeds from the sale of the Disposal Shares.
Other than as set out above, where imposed by law or
regulation, or where the Listing Rules require certain persons
to obtain clearance before dealing, there are no restrictions
regarding the transfer of shares in the Company. The Company
is not aware of any agreement which would result in a restriction
on the transfer of shares or voting rights.
Annual greenhouse gas emissions (include SECR)
The release of greenhouse gases (‘GHG’), notably carbon dioxide
(‘CO2’) generated by burning fossil fuels, has an impact on climate
change that, either directly or indirectly, represents considerable
risks both to the business and the planet. The Group will monitor
and, where practicably possible, reduce its GHG emissions.
The data below has been created using the following scopes:
Scope 1:
All direct emissions from the activities of an organisation or
under their control, including fuel combustion on site, such as
gas boilers, fleet vehicles and air-conditioning leaks.
Scope 2:
Indirect emissions from electricity purchased and used by the
organisation. Emissions are created during the production of the
energy eventually used by the organisation.
Scope 3:
All other indirect emissions from activities of the organisation,
occurring from sources that they do not own or control.
These are usually the greatest share of the carbon footprint,
covering emissions associated with business travel,
procurement, waste and water.
FY 2018/19
(tonnes)
FY 2019/20
(tonnes)
YoY
Increase
(tonnes)
YoY
Increase
%
0
215
1,390
2,169
3,774
0
0
0
229
13.59
6.32%
1,457
67.14
4.83%
2,593
424.06 19.55%
4,279
504.79 13.38%
Biomass
Scope 1
Scope 2
Scope 3
Total
Based on an average
headcount of:
Tonnes per person
per year
3,050
3,647
1.24
1.17
Some of the data for March and April 2020 are based on assumptions, as it has
not been possible to obtain final data from some utility companies due
to COVID-19.
In order to record and calculate this information, DWF utilises
a third party system (Accuvio) in which a record of energy, travel
etc. is recorded on a monthly basis. Invoices are received from
the utility supplier, preferred travel partner and the expenses
system from which the data is then recorded. The third party
system then breaks down this data into the correct scopes for
reporting purposes. Data records travel and energy usage
globally with the exception of some international offices which
are serviced offices. The analysis uses an operational control
approach which means that where there are serviced
agreements for utilities, the data is not included in the report.
Scope 3 has been included on a voluntary basis.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
96
Directors’ report continued
Political donations
The Group did not make any political donations or incur any
political expenditure during the year.
It is the Company’s policy not to make what are commonly
regarded as donations to political parties, and it is not intending
to change that policy. The Companies Act 2006 includes very
broad definitions of political donations and expenditure which
may have the effect of covering a number of normal business
activities that would not be commonly thought to be donations
to political parties. These could include support for bodies
engaged in law reform or Government policy review,
involvement in seminars and functions that may be attended
by politicians, and job exchanges between industry
and Government.
At the Annual General Meeting to be held on 21 October 2020,
and to avoid an inadvertent breach of the Companies Act 2006,
the Company will seek authority for itself and its subsidiaries
and subsidiary undertakings to make political donations not
exceeding £100,000 in total.
Research and development
DWF Ventures is DWF’s research and development arm, serving
as a vehicle to invest in and nurture new service lines that don’t
easily fit into the conventional and regulated practice group-
based business model. Ventures was launched in October 2017
as an arms-length limited company within Connected Services,
and provides services to internal teams as well as clients, with
a focus on generating ideas, delivering R&D requirements and
nurturing early-growth services.
Rules on appointment and replacement of Directors
A Director may be appointed by ordinary resolution of the
shareholders in a general meeting following nomination by
the Board or a member (or members) entitled to vote at such
a meeting. In addition, the Directors may appoint a Director
to fill a vacancy or as an additional Director, provided that the
individual retires at the next AGM. A Director may be removed
by the Company in certain circumstances set out in the
Company’s Articles of Association or by an ordinary resolution
of the Company. All Directors will seek re-election at the AGM
in October 2020 in accordance with the Company’s Articles
of Association and the recommendations of the Code.
Articles of association
The Company’s Articles of Association may be amended only by
passing a special resolution of the shareholders of the Company.
The Articles of Association are available on our website at
dwfgroup.com/en/investors.
Annual General Meeting
This year’s Annual General Meeting will be held at DWF Group
plc, 20 Fenchurch Street, London, EC3M 3AG on 21 October
2020 at 2.00pm. The Notice of Annual General Meeting is
available on our website dwfgroup.com/en/investors.
Important events affecting the Group since the end
of FY2019/20
Please see pages 73 and 74 in respect of the departure of
Andrew Leaitherland as Chief Executive Officer with effect from
29 May 2020. Sir Nigel Knowles was appointed as Chief
Executive Offer on 29 May 2020 and Chris Sullivan was
appointed as Interim Chair on the same date. On 1 August 2020,
Jonathan Bloomer was appointed as Chair and on the same
date, Chris Sullivan was appointed as Deputy Chair alongside his
role as Senior Independent Director. Please see pages 64 to 66
of the Corporate Governance report for further information in
respect of Board changes since the end of FY19/20.
Please see page 30 in respect of the discontinued operations in
our International division.
Please also see Note 31 Events after the reporting period in the
notes to the consolidated financial statements on page 152.
Disclosure of information to the Auditor
Having made the requisite enquiries, so far as each of the
Directors is aware, there is no relevant audit information (as
defined by section 418(3) of the Companies Act 2006) of which
the Company’s Auditor is unaware, and the Directors have taken
all the steps they ought to have taken as Directors to make
themselves aware of any relevant audit information, and to
ensure the Company’s Auditor is aware of that information.
Going concern
Having assessed the financial forecasts of the business, the
principal risks and other matters discussed in connection with
the viability statement on pages 48 and 49, the Directors
consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements, as the Company
will generate sufficient cash to meet its ongoing obligations for at
least 12 months from the date of signing the financial statements.
The Directors’ report was approved by the Board and has been
signed on its behalf by the Group General Counsel and
Company Secretary.
By order of the Board
Mollie Stoker
Group General Counsel and Company Secretary
7 September 2020
DWF Group plcAnnual report and financial statements 2020 97
Directors’ responsibility statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
(‘IFRSs’) as adopted by the European Union and Article 4 of
the IAS Regulation and have elected to prepare the Parent
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including
FRS 101 ‘Reduced Disclosure Framework’. Under company law
the Directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for
that period.
In preparing the Parent Company financial statements, the
Directors are required to:
− select suitable accounting policies and then apply
them consistently;
− make judgements and accounting estimates that are
reasonable and prudent;
− state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
− prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
− properly select and apply accounting policies;
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
− the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
− the Strategic report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face; and
− the Annual Report and financial statements, taken as
a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
This responsibility statement was approved by the Board
of Directors on 7 September 2020 and is signed on its behalf by:
− present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information;
Sir Nigel Knowles
Chief Executive Officer
7 September 2020
Chris Stefani
Chief Financial Officer
7 September 2020
− provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and
− make an assessment of the company’s ability to continue
as a going concern.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 98
,
Independent Auditor
members of DWF Group plc
s report to the
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the
current year were:
− Revenue recognition: valuation of unbilled
revenue;
− Adequacy of the provision for bad and
doubtful debts in respect of client receivables;
− Accounting for acquisitions; and
− Adequacy of controls over the cash
reconciliation and transaction recording cycle.
Within this report, key audit matters are
identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
The materiality that we used for the group
financial statements was £1.3m which was
determined on the basis of revenue.
Based on our scoping assessment, our audit
work covered 84% of the Group’s revenue and
82% of the Group’s net assets.
In the current year, we have decided to revise
our materiality benchmark from profit before tax
to revenue. Acquisition activity and the global
Covid-19 pandemic have driven unusual
income statement items such as gains on
bargain purchase and increased costs, resulting
in income statement volatility, specifically in
relation to profit before tax, hence the change
to a more stable metric.
Accounting for the new Group and IPO
transaction is no longer a Key Audit Matter as
it is considered an isolated event in 2019 and
therefore the risk no longer remains in 2020.
A new Key Audit Matter has been identified in
respect of Accounting for acquisitions in light of
the nature of the accounting judgements relating
to acquisitions in the year, explained further in
section 5 below.
Materiality
Scoping
Significant
changes
in our
approach
Report on the audit of the financial
statements
1. Opinion
In our opinion:
− the financial statements of DWF Group plc (the ‘parent
company’) and its subsidiaries (the ‘group’) give a true and fair
view of the state of the group’s and of the parent company’s
affairs as at 30 April 2020 and of the group’s profit for the year
then ended;
− the group financial statements have been properly prepared
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
− the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting
Standard 101 “Reduced Disclosure Framework”; and
− the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the group financial statements, Article 4 of the
IAS Regulation.
We have audited the financial statements which comprise:
− the consolidated income statement;
− the consolidated statement of comprehensive income;
− the consolidated and parent company balance sheets;
− the consolidated and parent company statements
of changes in equity;
− the consolidated cash flow statement; and
− the related notes 1 to 31.
The financial reporting framework that has been applied in
the preparation of the group financial statements is applicable
law and IFRSs as adopted by the European Union. The financial
reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law
and United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We confirm that the non-audit services prohibited
by the FRC’s Ethical Standard were not provided to the group or
the parent company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
DWF Group plcAnnual report and financial statements 2020 99
Going concern is the basis
of preparation of the financial
statements that assumes an
entity will remain in operation
for a period of at least
12 months from the date
of approval of the financial
statements.
We confirm that we have
nothing material to report, add
or draw attention to in respect
of these matters.
Viability means the ability
of the group to continue over
the time horizon considered
appropriate by the directors.
We confirm that we have
nothing material to report, add
or draw attention to in respect
of these matters.
4. Conclusions relating to going concern, principal risks and viability statement
4.1. Going concern
We have reviewed the directors’ statement in note 1.3 to the financial statements about whether
they considered it appropriate to adopt the going concern basis of accounting in preparing them and
their identification of any material uncertainties to the group’s and company’s ability to continue to
do so over a period of at least twelve months from the date of approval of the financial statements.
We considered as part of our risk assessment the nature of the group, its business model
and related risks including where relevant the impact of the Covid-19 pandemic and Brexit, the
requirements of the applicable financial reporting framework and the system of internal control.
We evaluated the directors’ assessment of the group’s ability to continue as a going concern,
including challenging the underlying data and key assumptions used to make the assessment,
and evaluated the directors’ plans for future actions in relation to their going concern assessment.
We are required to state whether we have anything material to add or draw attention to in relation
to that statement required by Listing Rule 9.8.6R(3) and report if the statement is materially
inconsistent with our knowledge obtained in the audit.
4.2. Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they were consistent
with the knowledge we obtained in the course of the audit, including the knowledge obtained in
the evaluation of the directors’ assessment of the group’s and the company’s ability to continue
as a going concern, we are required to state whether we have anything material to add or draw
attention to in relation to:
− the disclosures on pages 46 and 47 that describe the principal risks, procedures to identify
emerging risks, and an explanation of how these are being managed or mitigated;
− the directors’ confirmation on page 48 that they have carried out a robust assessment of the
principal and emerging risks facing the group, including those that would threaten its business
model, future performance, solvency or liquidity; or
− the directors’ explanation on pages 48 and 49 as to how they have assessed the prospects
of the group, over what period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable expectation that the group
will be able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
We are also required to report whether the directors’ statement relating to the prospects of the
group required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained
in the audit.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 100
,
Independent Auditor
members of DWF Group plc continued
s report to the
5.1. Revenue recognition: valuation of unbilled revenue
Key audit
matter
description
Revenue represents the fair value of the consideration receivable in respect of professional services provided
during the year.
Revenue is a significant balance within the income statement totalling £356,612,000 (2019: £317,221,000).
Unbilled revenue included within trade and other receivables totals £64,379,000 (2018: £53,996,000) (See
note 15 in the financial statements). The Group’s accounting policy for revenue is included at 1.15 within the
accounting policies and the unbilled revenue element is also disclosed within the key sources of estimation
uncertainty within note 1.24 in the financial statements.
How the scope
of our audit
responded to
the key audit
matter
The unbilled revenue valuation process involves profiling the population of client engagements (“matters”) and
applying a series of tests and parameters to identify those matters requiring a provision. There are also some
matters valued at fair value being the amount expected to be recovered based on the gross carrying amount
in unbilled revenue, which could be based on agreed hourly rates, fixed fees or historic client recovery rates
based on the previous 12 months of billing. We therefore identified as a key audit matter, a risk of material
misstatement, whether due to fraud or error, relating to the valuation of non-contingent unbilled revenue which
is valued on a line by line basis through fee earner input. This is because there is a higher degree of subjectivity
in this process.
To assess the adequacy of the valuation of the unbilled revenue balance, we disaggregated the unbilled
revenue balance and challenged management’s assumptions specifically around the risk described above and
performed the following procedures:
− obtained an understanding of the relevant controls over the unbilled income valuation processes;
− reviewed management’s paper which set out the application of the methodology;
− reviewed policies adopted by management for consistent application and compliance with IFRS principles;
− tested the accuracy and completeness of management’s calculation of the year end unbilled income balance
by reviewing each of the inputs;
− compared actual recovery rates for prior year unbilled revenue balances in order to assess the accuracy of
management’s historical estimates;
− performed detailed substantive testing of valuations by reference to post year end billings and/or
engagement letters and/or discussion with legal staff independent of the finance function;
− reviewed the presentation and disclosure of unbilled income within the financial statements and checked to
IFRS standards.
Key observations We concluded that the judgements made by management in calculating the unbilled revenue are reasonable
based on the audit evidence obtained.
DWF Group plcAnnual report and financial statements 2020 101
5.2. Adequacy of the provision for bad and doubtful debts in respect of client receivables
Key audit
matter
description
Client receivables are a significant element of the balance sheet totalling £108,727,000 (2018: £86,022,000).
The allowance for doubtful receivables totals £11,871,000 (2018: £6,534,000) (See note 15 in the financial
statements). The Group’s accounting policy for financial assets is included at 1.10 within the accounting policies
in the financial statements and the allowance for doubtful debts is also disclosed within the key sources
of estimation uncertainty within note 1.24 in the financial statements.
How the scope
of our audit
responded to
the key audit
matter
Management judgement is required in determining the level of provisioning required for overdue
trade receivables.
The key judgements are around the continued appropriateness of management’s policy based on the
ageing and recovery trends of debt balances, as well as the completeness of any specific provisions made.
Assessing the recoverability of this asset is a key audit matter and therefore focus is on the adequacy of the
provision for non-recovery.
To assess the adequacy of the receivables provisioning policy, we have performed the following:
− reviewed management’s paper which set out the application of the methodology;
− obtained an understanding of the controls over the billing cycle;
− challenged the adequacy of the provision by reference to the age and composition of the individual client and
sector debts;
− re-performed management’s provision calculations including sampling and tracing the correct ageing of the
data behind the calculation and checking that the policy is being uniformly applied across all business units;
− performed detailed testing on a sample of trade receivables by sending out debtor confirmations; and
− performed detailed testing on a sample of overdue trade receivables balances as at the year end for cash
received subsequently.
Key observations We concluded that the allowance for doubtful debts provision are appropriate and reasonable based on the
audit evidence obtained.
5.3. Accounting for acquisitions
Key audit
matter
description
How the scope
of our audit
responded to
the key audit
matter
There are a number of key judgements in this area. Assessing the fair value of the assets and liabilities
acquired, including any previously unrecognised intangibles is a key audit matter. The judgements around
acquisitions are noted within note 10 in the financial statements. The accounting treatment applied to the
consideration paid, in particular around whether this is treated as compensation rather than consideration,
especially with regards to the acquisition made in Spain, is also a key area of judgement. Another key area
of judgement is the determination of the acquisition date, which is a relevant factor for acquisitions made
in Spain and the USA.
As noted above, a key judgement relates to the determination of acquisition date. We challenged
management’s assessments on all acquisitions completed in the period and noted a difference in relation
to the Rousaud Costas Duran S.L.P acquisition, subsequently corrected by management.
To assess the adequacy of the accounting for acquisitions, we have performed the following:
− involved a team of valuation specialists to review the valuation of intangibles;
− obtained an understanding of relevant controls around accounting for acquisitions;
− performed opening balance testing on a sample of balance sheet items;
− performed detailed testing on the fair value adjustments posted by management by tracing to supporting
documentation;
− reviewed management’s considerations around determination of acquisition dates;
− reviewed management’s considerations around the split of consideration and compensation; and
− reviewed the presentation and disclosure within the financial statements of the various acquisitions.
Key observations We concluded that accounting for acquisitions is appropriate.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
102
,
Independent Auditor
members of DWF Group plc continued
s report to the
5.4. Adequacy of controls over the cash reconciliation and transaction recording cycle
Key audit
matter
description
For a business of its size and sector, the cash transactions and number of bank accounts within the Group
are substantial. The Group is subject to detailed rules over handling of both client and the group’s cash as
a requirement of its regulation by the Solicitors Regulation Authority.
We have noted from previous years’ audits that the process and controls within this area do not operate as
effectively as they should and therefore this area is deemed to be a key audit matter and also a risk of fraud.
In the past we have made a number of recommendations in relation to the cash controls in place.
Management have implemented some of those recommendations and have improved the cash control
function during the year.
The cash and cash equivalents total £28,727,000 (2019: £10,822,000) as set out in Note 16 in the financial
statements. The Group’s accounting policy for non-derivative financial instruments is included at 1.7 within the
accounting policies in the financial statements.
To assess the adequacy of cash reconciliation and processing cycle, we have performed the following:
− obtained an understanding of the treasury cycle;
− tested the reconciliation of total cash per the trial balance to supporting documentation in the form of bank
reconciliations;
− performed sample testing on the reconciling items by agreeing a sample of items to supporting
documentation;
− agreed the bank balances to the bank statement at the year end date;
− agreed the bank balances to the bank balance confirmation at the year end date; and
How the scope
of our audit
responded to
the key audit
matter
Key observations We concluded that the value of cash and cash equivalents are appropriate.
− evaluate implementation of improvements made to the cash control function
We have continued making recommendations in relation to cash controls, specifically with regards to
improvements which are yet to be fully implemented.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for determining
materiality
Group financial statements
£1,300,000 (2019: £1,200,000)
0.8% of revenue (2019: 4.6% of adjusted
pre-tax profit)
Rationale for the
benchmark applied
Revenue is the benchmark used for materiality as
it is considered the critical performance measure
of the Group and considered a stable metric
when compared to other relevant benchmarks.
In the current year, we have decided to revise
our materiality benchmark from profit before
tax to revenue. Acquisition activity and the
global Covid-19 pandemic have driven unusual
income statement items such as gains on
bargain purchase and increased costs, resulting
in income statement volatility, specifically in
relation to profit before tax, hence the change
to a more stable metric.
Parent company financial statements
£500,000 (2019: £480,000)
3% of net assets (2% of total assets)
This has been capped at 55% of Group
performance materiality being £500,000
The entity’s primary operation is to act as
the holding company of the Group. The key
balances held are intercompany balances and
the investments balance. As such net assets
have been taken as the benchmark for materiality.
We have decided to increase the percentage
by 1% to reflect the nature of the entity.
DWF Group plcAnnual report and financial statements 2020
103
Revenue
£356,612,000
Revenue
Group materiality
Group
materiality
£1,300,000
Component
materiality
range
£500,000 to
£591,500
Audit
Committee
Reporting
Threshold
£65,000
16%
18%
9%
Revenue
Net assets
24%
75%
58%
Full audit scope
Overseas component auditors
Desktop review
Full audit scope
Overseas component auditors
Desktop review
6.2. Performance materiality
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for
the financial statements as a whole. Group performance
materiality was set at 70% of group materiality for the 2020
audit (2019: 70%). In determining performance materiality,
we considered factors including: our risk assessment and our
assessment of the group’s overall control environment and
our past experience of the audit, which has indicated a lower
number of corrected and uncorrected misstatements identified
than in prior periods. There have been no material changes to
the business and operations are mature and stable.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report
to the Committee all audit differences in excess of £65,000
(2019: £59,000), as well as differences below that threshold that,
in our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the
financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of
the Group and its environment, including Group-wide controls,
and assessing the risks of material misstatement at the Group
level. Based on that assessment, we focussed our Group audit
scope primarily on the audit work of three components being
the UK, Australia and the newly acquired business in Spain.
The components are split by geographies for the purposes
of our review of scoping.
The Group audit team undertook the audit for the UK
component. In addition, specified procedures were carried
out by a component audit team based in Spain. The Australian
component was subject to a full scope audit to component
materiality by a team based in Australia. The remaining
components were subject to a review at Group level.
Working with other auditors
For the Spanish and Australian components, the group audit
team attended, remotely, the planning and close meetings and
reviewed documentation of the findings from their work, along
with remaining in continuous communication throughout the
course of the audit. The parent company is located in the UK
and is audited directly by the group audit team. At the group
level, we also tested the consolidation process and carried out
analytical procedures to confirm our conclusion that there were
no significant risks of material misstatement of the aggregated
financial information of the remaining components not subject
to audit of specified account balances.
8. Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact.
In this context, matters that we are specifically required to
report to you as uncorrected material misstatements of the
other information include where we conclude that:
The audited UK components represent the Group’s principal
business unit and account for 75% of the Group’s revenue
and 58% of the Group’s net assets. The Spanish and Australian
components represent 9% of the Group’s revenue and 24% of
the Group’s net assets. The remaining component subject to
desktop reviews represented 16% of the Group’s revenue and
18% of the Group’s net assets.
− Fair, balanced and understandable – the statement given
by the directors that they consider the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the group’s position and performance,
business model and strategy, is materially inconsistent with
our knowledge obtained in the audit; or
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 104
,
Independent Auditor
members of DWF Group plc continued
s report to the
− Audit committee reporting – the section describing the
work of the audit committee does not appropriately address
matters communicated by us to the audit committee; or
− Directors’ statement of compliance with the UK Corporate
Governance Code – the parts of the directors’ statement
required under the Listing Rules relating to the company’s
compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor
in accordance with Listing Rule 9.8.10R(2) do not properly
disclose a departure from a relevant provision of the UK
Corporate Governance Code.
We have nothing to report in respect of these matters.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken
on the basis of these financial statements.
Details of the extent to which the audit was considered capable
of detecting irregularities, including fraud and non-compliance
with laws and regulations are set out below.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
11. Extent to which the audit was considered capable
of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error, and then
design and perform audit procedures responsive to those risks,
including obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
11.1. Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
− the nature of the industry and sector, control environment and
business performance including the design of the group’s
remuneration policies, key drivers for directors’ remuneration,
bonus levels and performance targets;
− results of our enquiries of management legal counsel and the
audit committee about their own identification and
assessment of the risks of irregularities;
− any matters we identified having obtained and reviewed the
group’s documentation of their policies and procedures
relating to:
• identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of non-compliance;
• detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged
fraud;
• the internal controls established to mitigate risks of fraud
or non-compliance with laws and regulations;
− the matters discussed among the audit engagement team
including significant component audit teams and involving
relevant internal specialists, including tax, valuations and IT
specialists regarding how and where fraud might occur in the
financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the
opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential
for fraud in the following areas: the adequacy of the provision
for bad and doubtful debts in respect of client receivables;
accounting for acquisitions, revenue recognition: valuation of
unbilled revenue and the adequacy of controls over the cash
reconciliation and transaction recording cycle. In common
with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory
framework that the group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the
financial statements. The key laws and regulations we
considered in this context included the UK Companies Act,
Listing Rules and relevant tax and pensions legislation.
In addition, we considered provisions of other laws and
regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental
to the group’s ability to operate or to avoid a material penalty.
These included the Group’s regulatory solvency requirements.
DWF Group plcAnnual report and financial statements 2020 105
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue
recognition: valuation of unbilled revenue, the adequacy of
the provision for bad and doubtful debts in respect of client
receivables, accounting for acquisitions and the adequacy of
controls over the cash reconciliation and transaction recording
cycle as key audit matters related to the potential risk of fraud.
The key audit matters section of our report explains the matters
in more detail and also describes the specific procedures we
performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks
identified included the following:
− reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as
having a direct effect on the financial statements;
− enquiring of management, the audit committee and in-house
legal counsel concerning actual and potential litigation
and claims;
− performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
− reading minutes of meetings of those charged with
governance; and
− in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made
in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members
including internal specialists and significant component audit
teams, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Report on other legal and regulatory
requirements
12. Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
− the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
− the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group
and the parent company and their environment obtained in
the course of the audit, we have not identified any material
misstatements in the strategic report or the directors’ report.
13. Matters on which we are required to report
by exception
13.1. Adequacy of explanations received and
accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
− we have not received all the information and explanations we
require for our audit; or
− adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
− the parent company financial statements are not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
13.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report
if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration
report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
14. Other matters
14.1. Auditor tenure
Deloitte LLP was originally appointed auditor of DWF LLP,
the previous parent entity of the group, for the year ended
30 April 2008 and subsequent financial periods. Following the
IPO and the incorporation of DWF Group plc in 2019, Deloitte
LLP were retained as auditors at the recommendation of the
audit committee. The period of total uninterrupted engagement
with DWF Group plc, covering the financial years ending 30 April
2019 and 30 April 2020, is two years, and as auditor of DWF LLP
before that is 13 years.
14.2. Consistency of the audit report with the additional
report to the audit committee
Our audit opinion is consistent with the additional report to the
audit committee we are required to provide in accordance with
ISAs (UK).
15. Use of our report
This is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Peter Saunders (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London,
United Kingdom
7 September 2020
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 106
Consolidated income statement
Year ended 30 April 2020
Revenue
Recoverable expenses
Net revenue
Direct costs
Gross profit
Administrative expenses – other
Administrative expenses – trade receivables impairment
Operating profit
Adjusted operating profit
Impairment
Amortisation of intangible assets – acquired
Depreciation and amortisation
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Interest payable on leases
Net finance expense
Profit before tax
Taxation
Profit from continuing operations
Loss from discontinued operations
Profit for the year
Earnings from continuing operations per share attributable to the owners
of the parent:
Basic (p)
Diluted (p)
Earnings from all operations per share attributable to the owners of the parent:
Basic (p)
Diluted (p)
2020
£’000
356,612
(59,381)
297,231
(154,997)
142,234
(116,789)
(3,295)
22,150
36,915
(382)
(1,510)
(17,755)
25,084
(7,632)
(12,570)
(2,047)
(1,905)
18,198
(3,629)
14,569
(4,301)
10,268
5.4p
5.3p
3.8p
3.7p
Re-presented
(note 1.23)
2019
£’000
317,221
(49,085)
268,136
(124,707)
143,429
(125,888)
(2,376)
15,165
34,301
–
–
(5,365)
–
(12,569)
(1,202)
–
(2,131)
13,034
(138)
12,896
(712)
12,184
4.8p
4.7p
4.5p
4.5p
Notes
1
3
4
4
4
4
4
4
4
5
5
6
11
8
8
8
8
Notes 1 to 31 are an integral part of these consolidated financial statements. Comparative figures have not been restated for
transition to IFRS 16.
Consolidated statement of comprehensive income
Year ended 30 April 2020
Profit for the year
Items that are or may be reclassified subsequently to the income statement:
Foreign currency translation differences – foreign operations
Total other comprehensive (expense)/income for the year, net of income tax
Total comprehensive income for the year
Re-presented
(note 1.23)
2019
£’000
12,184
180
180
12,364
2020
£’000
10,268
(1,435)
(1,435)
8,833
Notes 1 to 31 are an integral part of these consolidated financial statements. Comparative figures have not been restated for
transition to IFRS 16.
DWF Group plcAnnual report and financial statements 2020
Consolidated statement of financial position
As of 30 April 2020
Non-current assets
Intangible assets and goodwill
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax asset
Total non-current assets
Current assets
Deferred tax asset
Trade and other receivables
Cash at bank and in hand
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Deferred consideration
Lease liabilities
Other interest-bearing loans and borrowings
Provisions
Amounts due to members of partnerships in the Group
Total current liabilities
Non-current liabilities
Trade and other payables
Deferred tax liability
Deferred consideration
Lease liabilities
Other interest-bearing loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Treasury shares
Other reserves
Accumulated losses
Total equity
Notes
12
13
14
15
22
22
15
16
17
18
19
20
30
17
22
18
19
20
23
23
23
24
24
2020
£’000
50,654
83,775
254
11,329
3,294
149,306
228
207,707
31,212
239,147
388,453
79,833
2,139
8,982
12,981
7,259
1,252
35,852
148,298
–
8,884
–
71,697
88,815
1,562
170,958
319,256
69,197
3,246
88,610
(20)
5,861
(28,500)
69,197
107
2019
£’000
4,541
14,032
254
152
933
19,912
–
164,168
12,912
177,080
196,992
53,995
418
1,625
–
9,028
1,252
38,071
104,389
10,072
–
208
–
39,196
1,329
50,805
155,194
41,798
3,000
63,167
–
(1,323)
(23,046)
41,798
Notes 1 to 31 are an integral part of these consolidated financial statements. Comparative figures have not been restated for
transition to IFRS 16.
The consolidated financial statements of DWF Group plc (company number: 11561594) were approved by the board on 7 September
2020 and signed on its behalf by:
Sir Nigel Knowles
Group Chief Executive Officer
Chris Stefani
Chief Financial Officer
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
108
Consolidated statement of changes in equity
Year ended 30 April 2020
At 1 May 2018
Impact of IFRS 9 transition
Impact of IFRS 15 transition
Restated at 1 May 2018
Profit for the year
Exchange rate difference
Total comprehensive income
Reserves transferred to amounts due to
members of partnerships in the Group
Deferred tax arising on group restructure
Issue of share capital
Treasury share sale
Share-based payments
At 30 April 2019
Share
capital
(Note 23)
£’000
2,385
–
–
2,385
–
–
–
–
–
615
–
–
3,000
Share
premium
(Note 23)
£’000
–
–
–
–
–
–
–
–
–
63,167
–
–
63,167
Merger
reserve
(Note 24)
£’000
(2,385)
–
–
(2,385)
–
–
–
Share-based
payments
reserve
(Note 24)
£’000
–
–
–
–
–
–
–
(Accumulated
losses)/
retained
earnings
(Note 24)
£’000
5,477
(2,510)
997
3,964
12,184
–
12,184
Translation
reserve
(Note 24)
£’000
(171)
–
–
(171)
–
180
180
Total equity
£’000
5,306
(2,510)
997
3,793
12,184
180
12,364
Treasury
shares
(Note 23)
£’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,385)
–
–
–
–
1,053
1,053
–
–
–
–
–
9
(42,537)
636
–
2,707
–
(23,046)
(42,537)
636
63,782
2,707
1,053
41,798
At 1 May 2019
Adjustment from the adoption of IFRS 16
(note 1.21)
Restated at 1 May 2019
Profit for the year
Exchange rate difference
Total comprehensive income
Treasury shares
Issue of share capital
Dividends paid
Share-based payments
Tax on share-based payments
At 30 April 2020
Share
capital
(Note 23)
£’000
3,000
Share
premium
(Note 23)
£’000
63,167
Treasury
shares
(Note 23)
£’000
–
Merger
reserve
(Note 24)
£’000
(2,385)
Share-based
payments
reserve
(Note 24)
£’000
1,053
Translation
reserve
(Note 24)
£’000
9
(Accumulated
losses)
earnings
(Note 24)
£’000
(23,046)
Total equity
£’000
41,798
–
3,000
–
–
–
–
246
–
–
–
3,246
–
63,167
–
–
–
–
25,443
–
–
–
88,610
–
–
–
–
–
(20)
–
–
–
–
(20)
–
(2,385)
–
–
–
–
–
–
–
–
(2,385)
–
1,053
–
–
–
–
–
–
8,619
–
9,672
–
9
–
(1,435)
(1,435)
–
–
–
–
–
(1,426)
(5,715)
(28,761)
10,268
–
10,268
–
–
(9,811)
–
(196)
(28,500)
(5,715)
36,083
10,268
(1,435)
8,833
(20)
25,689
(9,811)
8,619
(196)
69,197
Notes 1 to 31 are an integral part of these consolidated financial statements.
DWF Group plcAnnual report and financial statements 2020 Consolidated statement of cash flows
Year ended 30 April 2020
Cash flows from operating activities
Cash generated from/(used in) operations before adjusting items
Cash used to settle non-underlying items
Cash generated from/(used in) operations
Interest paid
Tax paid
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Acquisition of subsidiary, deferred consideration
Purchase of property, plant and equipment
Purchase of other intangible assets
Net cash flows used in investing activities
Cash flows from financing activities
Issue of ordinary shares, net of issue costs
Treasury share sale
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Movement in supplier payments facility
Interest received
Capital contributions by Members
Repayments to former Members
Net cash flows from financing activities
Note
29
109
2020
£’000
2019
£’000
24,158
(10,501)
13,657
(4,192)
(4,309)
(5,156)
(3,853)
(2,859)
(3,520)
(4,116)
(14,348)
(57)
–
(9,811)
73,535
(24,913)
(12,654)
(1,973)
456
5,938
(3,386)
27,135
(10,545)
(19,289)
(29,834)
(2,405)
(50)
(32,289)
–
(1,802)
(4,196)
(1,222)
(7,220)
73,350
2,707
–
80,290
(89,475)
–
(2,646)
293
4,732
(23,124)
46,127
Net increase in cash and cash equivalent
17,943
6,618
Cash and cash equivalents at the beginning of year
Effects of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of year
10,822
(38)
28,727
4,228
(24)
10,822
16
Notes 1 to 31 are an integral part of these consolidated financial statements.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
110
Consolidated notes to the financial statements
Year ended 30 April 2020
1. Accounting policies
1.1. General information
DWF Group plc (the ‘Company’) is a public limited company
incorporated on 10 September 2018, domiciled in the United
Kingdom under the Companies Act 2006 and registered in
England. The registered office is 20 Fenchurch Street, London,
EC3M 3AG.
The principal activities of the Company and its subsidiary
undertakings (together referred to as the ‘Group’) and the nature
of the Group’s operations are set out in the Strategic report.
The entire issued share capital of the Company was admitted to
the premium listing segment of the official list of the Financial
Conduct Authority and to trading on the Main Market of the
London Stock Exchange on 15 March 2019.
The functional currency of the Group is considered to be British
pounds sterling because that is the currency of the primary
economic environment in which the Group operates. The Group
financial statements are also presented in British pounds
sterling. Foreign operations are included in accordance with the
policies set out below.
For the year ending 30 April 2020 the following subsidiary
undertakings of the Company were entitled to exemption from
audit under s479A of the Companies Act 2006 relating
subsidiary undertakings:
Subsidiary name
DWF Connected Services Group Limited
DWF Connected Services Holdings Limited
DWF Costs Limited
DWF Advocacy Limited
DWF Resource Limited
DWF Claims Limited
DWF Adjusting Limited
DWF Forensic Limited
DWF Ventures Limited
DWF Company Secretarial Services Limited
DWF Connected Services Limited
Greyfern Law Limited
DWF (Northern Ireland) LLP
Mindcrest UK Limited
DWF (TG) Limited
Registration number
10826005
10745072
10754856
10780559
11271111
10586109
10586114
10749670
10749685
04176234
11552915
06666404
NC001393
10685700
10568838
1.2. Basis of accounting
The Group financial statements consolidate those of the
Company and its subsidiary undertakings.
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(‘IFRS’), including International Accounting Standards (‘IAS’) and
interpretations issued by the IFRS Interpretations Committee
(‘IFRS IC’) applicable to companies reporting under IFRS, and as
adopted in the EU, and in accordance with the Companies Act
2006 as applicable to companies using IFRS.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in the
Group financial statements. The exception to this statement is
the application of IFRS 16 which became effective on 1 January
2019 and adopted by the Group on a prospective basis from
1 May 2019.
The financial statements have been prepared on the
historical cost basis except where the IFRS requires an
alternative treatment.
Subsidiary and partnership undertakings
Subsidiary and partnership undertakings are entities controlled
by the Group. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power over the entity. In assessing control, the Group takes into
consideration potential voting rights. The acquisition date is the
date on which control is transferred to the Group and
deconsolidated from the date control ceases. The financial
information of subsidiaries and subsidiary undertakings is
included in the consolidated financial statements from the date
that control commences until the date that control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions, are
eliminated. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence
of impairment.
Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to the Group.
On 11 March 2019, the Company acquired the entire share
capital of DWF Holdings Limited, its subsidiaries and all related
undertakings under common control.
The restructure was a transaction under common control and
therefore outside of the scope of IFRS 3. As such, management
have elected, as permitted under IAS 8, to adopt the Group
reconstruction provisions of FRS 102.19.27 ‘Group
reconstructions’ from FRS 102.
In the previous financial year, the financial statements were
prepared using merger accounting principles (applicable to
Group reconstructions) set out in FRS 102 Section 19 in order
to meet the overriding requirements under section 404 of the
Companies Act 2006 for the financial statements to present
a true and fair view. Under merger accounting the results
of the Group entities are combined from the beginning
of the comparative period before the merger occurred.
Income statement and statement of financial position
comparatives are restated on a combined basis and adjustments
made to achieve consistency of accounting principles.
A merger reserve totalling £2,385,000 is included within the
consolidated statement of changes in equity following the
adoption of these principles which have given rise to the
following changes:
1. Share capital is recognised in the prior year comparator
2. Members remuneration charged as an expense is recognised
in the consolidated income statement
3. Amounts due to members of partnerships in the Group is
recognised as a current liability in the consolidated statement
of financial position
DWF Group plcAnnual report and financial statements 2020 111
For acquisitions on or after 1 May 2015 (which is the date of
transition to IFRS), the Group measures goodwill at the
acquisition date as:
− the fair value of the consideration transferred; plus
− the recognised amount of any non-controlling interests in the
acquiree; plus
− the fair value of any existing equity interest in the acquiree;
less
− the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in the income statement.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed
as incurred.
Any contingent consideration payable is recognised at fair
value at the acquisition date. If the contingent consideration
is classified as equity, it is not re-measured and settlement
is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised
in the income statement.
Acquisitions prior to 1 May 2015 (date of transition to IFRS)
IFRS 1 grants certain exemptions from the full requirements of
IFRS in the transition period. The Group elected not to restate
business combinations that took place prior to 1 May 2015.
In respect of acquisitions prior to 1 May 2015, goodwill is
included at 1 May 2015 on the basis of its deemed cost, which
represents the amount recorded under UK GAAP which was
broadly comparable except that only separable intangibles were
recognised and goodwill was amortised. On transition,
amortisation of goodwill ceased as required by IFRS 1.
1.3. Going concern
The Directors have assessed the going concern basis adopted
by the Group in the preparation of the consolidated financial
statements, taking into account the current financial position
of the Group including our financing arrangements, the business
model at the time of approving this report and the uncertain
environment due to the impact of COVID-19. The Directors’
assessment was over the period to 30 September 2021
taking account of the potential impact of the principal risks
documented in the Strategic Report and accepting that whilst
the COVID-19 pandemic is ongoing, there are external factors
that could affect Group trading that are difficult to predict with as
much confidence as would have been the case pre-pandemic.
The Group experienced a material impact from COVID-19 in the
final quarter of the year, seeing revenue fall away suddenly and
to an unprecedented degree due to a number of factors caused
by COVID-19. This impact materially reduced profit expectations
for FY20 as the April year-end coincided with the peak impact
of the pandemic, and it was not possible to mitigate the income
statement or cash impact of COVID-19 due to the lead-time
required to reduce costs and mobilise operational initiatives
around working capital management. In response to this impact
a number of actions were taken to protect liquidity, access to
funding and near-term profit protection:
− Financial covenants were reviewed and it was agreed with
the banking syndicate, with whom the Group has strong
relationships, to relax the EBITDA to net debt covenant (the
leverage covenant) from 1.5 times to 2 times on the April and
July testing dates, and 1.75 times on the October 20 and
January 21 testing date, and back to 1.5 times EBITDA by
April 21.
− An additional £15m contingency RCF facility was put in place,
for up to July 2021 (with an additional six month extension
available to the Company), to provide extra funding should
there be any further adverse impact on working capital.
This facility has not been drawn and is not envisaged to be
required based on current modelling assumptions.
− Cost reduction measures were agreed and executed to
secure £15m of cost savings in FY21 to remove excess
capacity from the business as a result of lower activity levels
due to COVID-19.
− Operational initiatives were launched to improve lockup
management and reduce working capital consumption by
improving billing and collection processes.
− Whilst no staff were furloughed under the UK government
scheme, the Group availed itself of a number of permitted tax
deferrals made available by HMRC which will be repaid over
the course of 2021.
The actions above were a prudent reaction to a highly unusual
situation due to the sudden and severe impact of COVID-19
that impacted Q4 of FY20. The timing of the COVID-19 impact
followed a period of heavy investment whereby capital had been
deployed on the strategic acquisition of RCD in Spain
(December) and Mindcrest (January) – both acquisitions
continue to perform well and serve as a differentiator in the legal
sector. These acquisitions were progressed with the anticipation
that the traditionally strong final quarter of the year would
replenish the cash deployed and generate sufficient EBITDA
to keep the leverage covenant within more normal parameters.
Under more typical circumstances, the COVID-19 impact, whilst
significant, would not have necessitated such material actions
around liquidity and covenants in particular, and the Directors are
of the view that as trading normalises FY21 will transition the
business back to a lower level of borrowings and leverage.
Banking facilities, which in addition to the contingency facility
and various ancillary facilities, include a rolling credit facility of
£80m that matures in January 2022 (with an additional one year
extension available to the Company to January 2023) are
considered to be sufficient for the Group’s purposes based on
current projections. It is assumed that these facilities will be
renewed successfully in 2021. The leverage covenant is set at
1.5 times EBITDA from April 21 onwards and the Group expects
to operate comfortably within this parameter for the forecast
period. The other covenants, being maximum net debt of
1 times equity, minimum 4 times interest cover, WIP and
debtors being a minimum of 2 times net debt and the number
of members in the group remaining above 180 are all projected
to be fully compliant with significant headroom. The directors
consider short term cash flows are monitored on a monthly
basis. All results and forecasts confirm full covenant compliance,
and sufficient resources to settle liabilities as they fall due.
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1. Accounting policies continued
Base case budget assumptions for FY21, and medium term
modelling assumptions for FY22 and beyond, reflect that the
Group will operate in compliance with covenants and with
sufficient cash and access to banking facilities to meet all
obligations as they fall due. The timing of the FY20 preliminary
annual results announcement being moved to 8 September has
given the Directors visibility of trading performance and cash
flows for May to August and both profit and cash generation
have improved since the Q4 COVID-19 impact. It has also been
possible to assess the impact, so far, of the mitigating actions
outlined above. The Directors are of the view that the stronger
than expected trading performance in recent months and the
availability of additional cash and cost mitigations in the event of
further headwinds give confidence in the ongoing viability of the
Group. Mitigations available to the Group include further cost
cutting measures including bonus payments, deferral of certain
outflows, and review of the dividend policy and reassessment of
capital expenditure.
The going concern assessment considers business plans,
funding and liquidity requirements as well as sensitivity analysis
to account for a reasonable worst case scenario. All indicators
show full covenant compliance after taking into account
mitigating actions that the Group would take in such a scenario.
The Group’s current position and principal risks have been
considered, with those risks set out in the Strategic Report.
These risks have been considered individually and in aggregate,
and with reference to Group strategy and external factors such
as COVID-19 and adverse economic conditions. In assessing
going the Group the Directors considered different scenarios
and performed sensitivity assessment. These scenarios and
sensitivities included a reduction of revenue and working capital.
These scenarios and sensitivities did not indicate a mitigated
reasonable worst case scenario that requires any
enhanced disclosure.
Whilst the impact of COVID-19, and the risk of future disruption,
could potentially be material the Directors consider the following
characteristics of the legal sector and the Group instructive in
forming their conclusions on going concern:
− The ongoing profitability of the business in FY20, generating
£22m of Adjusted EBITDA despite the severe Q4
COVID-19 impact.
− The annuity and counter-cyclical nature of certain divisions and
services such as Insurance and Litigation.
− Low exposure to sectors more severely impacted by COVID-19.
− The ability to flex the acquisition strategy to allow cash to
replenish in the business after the timing of COVID-19
exacerbated the stretch on cash from two recent
strategic acquisitions.
− The availability of mitigating actions to control costs.
− A strong relationship with the Group’s banking syndicate who
continue to provide facilities which ensure ongoing liquidity
with material headroom.
− Whilst the Group has no current plan to change the use of its
real estate portfolio the experience of agile working as part of
our COVID-19 response may give opportunities to review
office space in the future.
− Operational interventions being implemented to improve
working capital performance, with the aim of reducing lockup
and therefore net debt.
The Directors therefore consider that the business model is
appropriately robust, and that there are sufficient mitigating
actions available to the Board, that the Group is suitably resilient
to deal with the crystallisation of key risks and/or adverse
economic conditions. On this basis, the Directors have
a reasonable expectation that the Group will continue as
a going concern and meet all its liabilities as they fall due.
1.4. Foreign currency
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the
foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies at the statement of financial position date are
retranslated to the functional currency at the foreign exchange
rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the consolidated income statement
with administrative expenses. Non-monetary assets and
liabilities that are measured in terms of historical cost in
a foreign currency are translated using the exchange rate at
the date of the transaction.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation,
are translated to the Group’s presentational currency, at foreign
exchange rates ruling at the statement of financial position date.
The revenues and expenses of foreign operations are translated
at an average rate for the year where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive
income and accumulated in the translation reserve.
1.5. Alternative performance measures (‘APMs’)
The Group uses APMs to assess the financial performance of
the business alongside statutory measures. These measures are
non-IFRS measures. Further explanations of the APMs can be
found in the Strategic Report and in note 2.
1.6. Non-underlying items
Non-underlying items are non-trading, non-cash or one-off items
disclosed separately in the consolidated income statement
where the quantum, nature or volatility of such items are
considered by the management to otherwise distort the
underlying performance of the Group. The following are included
by the Group in its assessment of non-underlying items:
− Transaction expenses associated with acquisitions
− Purchase price relating to acquisitions treated as remuneration
− Expenses directly associated with COVID-19
− IPO-related expenses
1.7 Non-derivative financial instruments
Non-derivative financial instruments comprise investments,
trade and other receivables, cash and cash equivalents, loans
and borrowings, and trade and other payables.
Investments
Other investments are held at fair value through profit or loss.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 113
Trade and other receivables
Trade and other receivables are recognised initially at fair value.
Subsequent to initial recognition, they are measured at
amortised cost using the effective interest method, less any
impairment losses, arising from expected credit losses.
Customer relationships
The Group recognises acquired customer relationships at fair
value less any accumulated impairment losses. Customer
relationships are amortised on a straight-line basis over the
estimated useful life.
Unbilled revenue
Services provided to clients, which at the period end date have
not been billed, are recognised as unbilled revenue and included
in trade and other receivables.
Brand
The Group recognises acquired brand intangibles at fair value
less any accumulated impairment losses. Brands are amortised
on a straight-line basis over the estimated useful life.
Unbilled revenue is valued at selling price less provision for any
foreseeable under-recovery when the outcome of the matter
can be assessed with reasonable certainty. Provision is made for
such factors as historical recoverability rates, contingencies, and
agreements with clients and amounts considered irrecoverable
by fee earners.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and cash
deposits. Bank overdrafts that are repayable on demand and
form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for the
purpose only of the statement of cash flows.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at
amortised cost using the effective interest method, less any
impairment losses.
1.8 Property, plant and equipment
Property, plant and equipment is stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
of property, plant and equipment.
Depreciation is charged to the income statement on a straight-
line basis over the estimated useful lives of each part of an item
of property, plant and equipment. The estimated useful lives are
as follows:
− Right of use asset
Over remaining term of the lease
− Leasehold improvements Over remaining term of the lease
− Computer equipment
− Office equipment and
fixtures and fittings
5-10 years
4 years
Depreciation methods, useful lives and residual values are
reviewed at each statement of financial position date.
1.9 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is
not amortised but is tested annually for impairment. Refer to
further detail in note 1.10 that discusses the methodology and
policy for assessing impairment.
Software costs
Significant costs associated with software development are
deferred and amortised on a straight-line basis over the period
of their expected benefit.
Capitalised development costs
Expenditure on research activities is recognised in the income
statement as an expense is incurred.
Expenditure on development activities is capitalised if the
product or process is technically and commercially feasible and
the Group intends to and has the technical ability and sufficient
resources to complete development, future economic benefits
are probable and if the Group can measure reliably the
expenditure attributable to the intangible asset during its
development. Development activities involve a plan or design
for the production of new or substantially improved products
or processes. The expenditure capitalised includes the cost
of materials, direct labour and an appropriate proportion of
overheads and capitalised borrowing costs. Other development
expenditure is recognised in the income statement as an
expense is incurred. Capitalised development expenditure is
stated at cost less accumulated amortisation and less
accumulated impairment losses.
Amortisation
Amortisation is charged to the income statement on a straight-
line basis over the estimated useful lives of intangible assets
unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for
impairment at each statement of financial position date.
Other intangible assets are amortised from the date they are
available for use. The estimated useful lives are as follows:
− Customer relationships
− Brand
− Software costs
− Capitalised development costs
10 years
2 years
4 years
4 years
1.10 Impairment
Financial assets (including receivables)
The Group recognises a loss allowance for expected credit
losses on investments in debt instruments that are measured
at amortised cost or at FVTOCI, trade receivables and contract
assets. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
The Group recognises lifetime expected credit losses (ECL) for
trade receivables and contract assets. The expected credit
losses on these financial assets are estimated using a provision
matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as
well as the forecast direction of conditions at the reporting date,
including time value of money where appropriate.
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114
1. Accounting policies continued
For other financial instruments, the Group recognises lifetime
ECL when there has been a significant increase in credit risk
since initial recognition. However, if the credit risk on the
financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life of
a financial instrument. In contrast, 12-month ECL represents the
portion of lifetime ECL that is expected to result from default
events on a financial instrument that are possible within
12 months after the reporting date.
(i) Significant increase or decrease in credit risk
In assessing whether the credit risk on a financial instrument
has changed significantly since initial recognition, the Group
compares the risk of a default occurring on the financial
instrument at the reporting date with the risk of a default
occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers
both quantitative and qualitative information that is reasonable
and supportable, including historical experience and forward-
looking information that is available without undue cost or effort.
Examples of forward-looking information the Group may
consider include the future prospects of the industries in which
the Group’s debtors operate, obtained from economic expert
reports, financial analysts, governmental bodies, relevant
think-tanks and other similar organisations, as well as
consideration of various external sources of actual and forecast
economic information that relate to the Group’s core operations.
In particular, the following information is taken into account
when assessing whether credit risk has increased significantly
since initial recognition:
− an actual or expected significant deterioration in the financial
instrument’s external (if available) or internal credit rating;
− significant deterioration in external market indicators of credit
risk for a particular financial instrument;
− existing or forecast adverse changes in business, financial or
economic conditions that are expected to cause a significant
change in the debtor’s ability to meet its debt obligations;
− an actual or expected significant deterioration or improvement
in the operating results of the debtor;
− significant changes in credit risk on other financial instruments
of the same debtor; and
− an actual or expected significant adverse change in the
regulatory, economic, or technological environment of the
debtor that results in a significant change in the debtor’s ability
to meet its debt obligations.
Despite the foregoing, the Group assumes that the credit risk on
a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low
credit risk at the reporting date. A financial instrument is
determined to have low credit risk if:
1. the financial instrument has a low risk of default;
2. the debtor has a strong capacity to meet its contractual cash
flow obligations in the near term; and
3. adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability
of the borrower to fulfil its contractual cash flow obligations.
The Group regularly monitors the effectiveness of the criteria
used to identify whether there has been a significant increase in
credit risk and revises them as appropriate to ensure that the
criteria are capable of identifying significant increase in credit
risk before the amount becomes past due.
(ii) Definition of default
The Group considers the following as constituting an event of
default for internal credit risk management purposes as
historical experience indicates that financial assets that meet
either of the following criteria are generally not recoverable:
− when there is a breach of financial covenants by the debtor; or
− information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full (without taking into
account any collateral held by the Group).
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. Evidence that a
financial asset is credit-impaired includes observable data about
the following events:
1. significant financial difficulty of the issuer or the borrower;
2. a breach of contract, such as a default or past due event (see
(ii) above);
3. the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s)
would not otherwise consider;
4. it is becoming probable that the borrower will enter
bankruptcy or other financial reorganisation; or
5 the disappearance of an active market for that financial asset
because of financial difficulties.
(iv) Write-off policy
The Group writes off a financial asset when there is information
indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the debtor
has been placed under liquidation or has entered into bankruptcy
proceedings. Financial assets written off may still be subject to
enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate.
Any recoveries made are recognised in profit or loss.
(v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the
probability of default, loss given default (i.e. the magnitude of
the loss if there is a default) and the exposure at default.
The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking
information as described above. As for the exposure at default,
for financial assets, this is represented by the assets’ gross
carrying amount at the reporting date.
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1.11 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
income statement in the periods during which services are
rendered by employees.
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee
and the obligation can be estimated reliably.
1.12 Provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation
as a result of a past event, that can be reliably measured and it
is probable that an outflow of economic benefits will be required
to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects
risks specific to the liability.
1.13 Share-based payments
The Group operates equity-settled, share-based compensation
plans, under which the business receives services from partners
and employees as consideration for equity instruments (share
awards and options) of the Group. The fair value of the services
received in exchange for the grant of share awards and options
is recognised as an expense. The total amount to be expensed
is determined by reference to the fair value of the share awards
and options granted, excluding the impact of any non-market
service and performance vesting conditions (for example,
remaining engaged by the entity over a specified time period).
Non-market vesting conditions are included in assumptions
about the number of share awards and options that are
expected to vest. The total amount expensed is recognised over
the vesting period, which is the period over which all of the
specified existing conditions are to be satisfied. At each
statement of financial position date, the Group revises its
estimates of the number of share awards and options that are
expected to vest based on the non-market vesting conditions.
It recognises the impact of the revision to original estimates, if
any, in the income statement, with a corresponding adjustment
to the share-based payments reserve within equity.
The social security contributions in connection with the grant
of the share awards is itself considered an integral part of the
grant, and the charge will be treated as an equity-settled
transaction. The cumulative share-based payment charge held
in reserves is recycled into retained earnings when the share
awards or options lapse or are exercised.
For financial assets, the expected credit loss is estimated as the
difference between all contractual cash flows that are due to the
Group in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at the original
effective interest rate. For a lease receivable, the cash flows
used for determining the expected credit losses is consistent
with the cash flows used in measuring the lease receivable in
accordance with IFRS 16.
If the Group has measured the loss allowance for a financial
instrument at an amount equal to lifetime ECL in the previous
reporting period, but determines at the current reporting date
that the conditions for lifetime ECL are no longer met, the Group
measures the loss allowance at an amount equal to 12-month
ECL at the current reporting date, except for assets for which
the simplified approach was used.
The Group recognises an impairment gain or loss in profit or loss
for all financial instruments with a corresponding adjustment to
their carrying amount through a loss allowance account, except
for investments in debt instruments that are measured at
FVTOCI, for which the loss allowance is recognised in other
comprehensive income and accumulated in the investment
revaluation reserve, and does not reduce the carrying amount
of the financial asset in the statement of financial position.
Non-financial assets
The carrying amounts of the Group’s non-financial assets are
reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated. For goodwill, and
intangible assets that have indefinite useful lives or that are not
yet available for use, the recoverable amount is estimated each
year at the same time.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value
of money and the risks specific to the asset. For the purpose
of impairment testing, assets that cannot be tested individually
are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups
of assets (the ‘cash-generating unit’). The goodwill acquired in
a business combination, for the purpose of impairment testing,
is allocated to cash-generating units, or (‘CGU’), that are
expected to benefit from the synergies of the combination.
For the purposes of goodwill impairment testing, CGUs to which
goodwill has been allocated are aggregated so that the level at
which impairment is tested reflects the lowest level at which
goodwill is monitored for internal reporting purposes but not
at a level higher than the group’s operating segment.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
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1. Accounting policies continued
1.14 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity
share capital (‘Treasury shares’), the consideration paid,
including any directly attributable incremental costs (net of
income taxes), is deducted from equity attributable to the
Company’s equity holders until the shares are cancelled
or reissued.
1.15 Net revenue
Net revenue is measured based on the consideration specified
in a contract with a client and excludes amounts collected on
behalf of third parties. Net revenue represents the fair value of
the consideration receivable in respect of professional services
provided during the period, exclusive of disbursements and
value added taxes.
A contract with a client is recognised when a contract is signed
and legally enforceable by the Group; this will be prior to the
commencement of work for a client and therefore before any
time is accrued by the Group. A single performance obligation
is identified on a contract by contract basis; where contracts are
entered into at the same time with the same client at differing
rates, these may be considered a single contract for the
purposes of revenue recognition.
The Group does not provide extended terms on its services and
therefore no significant financing components are identified by
the Group. The Group applies the revenue constraint in respect
of variable consideration by estimating the amount from clients
on unbilled items. This assessment is based on the Group’s
historical recoverability rates, contingencies, agreements with
clients and amounts considered irrecoverable by fee earners.
Revenue is only recognised on contingent matters from the
point at which it is highly probable that a significant reversal in
the amount of cumulative revenue recognised will not occur,
and it is measured by consideration of historical recoverability
rates and agreements with clients.
1.16 Financing income and expenses
Financing expenses comprise interest payable, unwinding of
the discount on provisions, and net foreign exchange losses that
are recognised in the income statement (see foreign currency
accounting policy – note 1.4). Borrowing costs that are directly
attributable to the acquisition, construction or production of an
asset that takes a substantial time to be prepared for use, are
capitalised as part of the cost of that asset. Financing income
comprise interest receivable on funds invested, and
dividend income.
Interest income and interest payable is recognised in the income
statement as it accrues, using the effective interest method.
Dividend income is recognised in the income statement on the
date the entity’s right to receive payments is established.
Foreign currency gains and losses are reported on a net basis.
1.17 Segmental reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the Company’s Board of
Directors (‘the Board’) which is considered as the Group’s chief
operating decision maker and is responsible for allocating
resources and assessing performance of the operating
segments. The Board considers the business from both
a geographic and divisional perspective. Geographically,
management considers the performance of the Group between
the UK, Rest of Europe, Middle East and the Rest of the World.
1.18 Taxation
Current tax
The tax expense represents the current tax relating to the
Company and other Group companies. The current tax expense
is based on taxable profits of these companies for the year.
Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The current tax
liability is calculated using tax rates that have been enacted
or substantively enacted by the statement of financial
position date.
A provision is recognised for those matters for which the tax
determination is uncertain but it is considered probable that
there will be a future outflow of funds to a tax authority.
The provisions are measured at the best estimate of the amount
expected to become payable. The assessment is based on the
judgment of tax professionals within the Group supported by
previous experience in respect of such activities and in certain
cases based on specialist independent tax advice.
Current tax assets and liabilities are offset only when there is
a legally enforceable right to set off the amounts and the Group
intends to either settle on a net basis or realise the asset and
settle the liability simultaneously.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is
accounted for using the liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, a deferred
tax liability is not recognised if the temporary difference arises
from the initial recognition of goodwill.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 117
Prior to the reorganisation on 9 March 2019, all of the profits
earned by the LLPs were attributable to Members who were
individual persons so neither taxation nor related deferred
taxation on those profits is accounted for in the historical
financial information relating to this period.
1.19 Dividends
Dividend distributions are recognised in the consolidated
financial statements when the shareholders’ right to receive
payment is established.
Final dividend distributions are recognised in the period in which
they are approved by the shareholders, whilst interim dividend
distributions are recognised in the period in which they are
declared and paid.
1.20 Transactions with and amounts due to members
of limited liability partnerships or general partnership
(‘Partnerships’) in the Group
Divisible profits and payments to members of partnerships
in the Group
Members of partnerships within the Group (‘members’), under
the terms of the relevant members’ agreement, draw monthly
on account. Drawings are based on a fixed share.
Pre-IPO, the partners who are equity members of the
partnerships received drawings throughout the year. After the
year end a final payment/(or receipt) was usually paid/received
up to a maximum of the total distributable profits of
the partnership.
Any unallocated profit after distribution to members are included
in other reserves.
Post-IPO, all members have a fixed share that forms part of
a wider remuneration package. This amount is reviewed on an
annual basis and is recognised within the income statement
within direct costs. The amounts that are due to the partners
from the periods prior to the IPO are recognised as amounts
due to members of partnerships in the Group.
Members’ remuneration charged as an expense
Members’ remuneration charged as an expense is recognised
within direct costs totalling £38,808,000 (2019: £31,014,000).
Pre-IPO, this was calculated based on the monthly draw of
members. Post-IPO, this has been calculated based on the Total
Fixed Annual Compensation Amount, which is the members’
annual fixed profit share plus, for some members, a nominal
salary. Any dividend income received as shareholders and
amounts from participation in share incentive plans are excluded
from members’ remuneration charged as an expense.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, subsidiary
undertakings and associates, and interests in joint ventures,
except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in
the foreseeable future. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profits
will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the reporting date. The measurement
of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which
the Group expects, at the end of the reporting period, to recover
or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
For the purposes of measuring deferred tax liabilities and
deferred tax assets for investment properties that are measured
using the fair value model, the carrying amounts of such
properties are presumed to be recovered entirely through sale,
unless the presumption is rebutted.
As a result, the Group has not recognised any deferred taxes on
changes in fair value of the investment properties, as the Group
is not subject to any income taxes on the fair value changes of
the investment properties on disposal.
Current tax and deferred tax for the year
Current and deferred tax are recognised in the income
statement, except when they relate to items that are recognised
in other comprehensive income or directly in equity, in which
case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included
in the accounting for the business combination.
A share of the Group’s profits is earned by the limited liability
partnerships (‘LLPs’) within the Group. The taxation on profits
earned by the LLPs is, generally, recognised as a liability borne
by the Members. The Members include a corporate entity and
individual persons. The corporate member is subject to taxation
on its share of the LLPs’ profits as set out above. Taxation on the
individual persons’ share of the LLPs’ profits remains their
personal liability so neither taxation nor related deferred taxation
is accounted for in the financial information of the Group,
although payment of such liabilities is administered by the
Group on behalf of those Members.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 118
1. Accounting policies continued
1.21 Adoption of new and revised standards
New and amended IFRSs that are effective for the
current year
The Group has applied IFRS 16 from 1 May 2019.
IFRS 16: Leases
The Group has adopted ‘IFRS 16’ using the modified
retrospective approach from 1 May 2019, but has not restated
comparatives for previous reporting periods, as permitted under
the specific transitional provisions in the standard.
The reclassifications and adjustments arising from the new
leasing rules are therefore recognised in the opening statement
of financial position on 1 May 2019.
The Group has lease contracts for various offices and office
equipment. Before the adoption of IFRS 16 the Group accounted
for leases under IAS 17: Leases (‘IAS 17’) and were classified as
either finance or operating leases. Under IAS 17, all the Group’s
leases were classified as operating leases and the payments
made on leases (net of any incentives received from the lessor)
were charged to the income statement on a straight-line basis
over the period of the lease.
On adoption of IFRS 16, the Group recognised right-of-use
assets and lease liabilities in relation to leases which had
previously been classified as operating leases under the
principles of IAS 17. The Group has elected to measure its right
of use assets arising from property leases using the approach
set out in IFRS 16.C8(b)(i). Under IFRS 16.C8(b)(i) right of use
assets are calculated as if the Standard applied at lease
commencement, but discounted using the borrowing rate at the
date of initial application. Lease liabilities were measured at the
present value of the remaining lease payments, discounted
using the Group’s incremental borrowing rate.
The Group’s weighted average incremental borrowing rate used
as at 1 May 2019 was 2.57%.
The change in accounting policy resulted in the following
operating lease commitments disclosed under IAS 17 being
recorded as lease liabilities on the statement of financial position
at 1 May 2019:
Total operating lease commitments
disclosed at 30 April 2019
Short-term land low-value eases not included in
lease liabilities
Changes in terms recognised under IFRS 16
Discounted using incremental borrowing rate
Total lease liabilities recognised under
IFRS 16 at 1 May 2019
£’000
73,212
(1,989)
21,449
(9,370)
87,302
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
− The use of a single discount rate to a portfolio of leases
with reasonably similar characteristics.
− Reliance on previous assessments on whether leases
are onerous.
− The accounting for operating leases with a remaining lease
term of less than 12 months as at 1 May 2019 as short-term.
− The exclusion of initial direct costs for the measurement
of the right-of-use asset at the date of initial application.
− The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains, a lease at the date of initial application. Instead,
for contracts entered into before the transition date, the Group
relied on its assessment made applying IAS 17 and IFRIC 4:
Determining whether an Arrangement contains a Lease.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
− the lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
− the lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual
value, in which cases the lease liability is remeasured by
discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to
a change in a floating interest rate, in which case a revised
discount rate is used).
− a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The Group did not make any such adjustments during the
periods presented.
The impact of the first-time application of IFRS 16 on the
statement of financial position at 1 May 2019 is:
Property, plant and equipment
Right-of-use asset
Trade and other receivables
Prepayments
Current trade and other payables
Accruals
Operating lease incentives
Lease liabilities
Non-current trade and other payables
Operating lease incentives
Lease liabilities
Net assets
Equity
Accumulated losses
Total equity
Impact of
transition
£’000
70,342
(1,689)
(537)
(1,412)
8,276
(10,072)
78,113
(5,715)
(5,715)
(5,715)
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
119
As the Group has applied the simplified approach in respect
of comparatives at transition, comparative information has
not been restated and continues to be reported under IAS 17.
The table below demonstrates the impact of using IAS 17
compares to IFRS 16 on the Group’s income statement for the
year to 30 April 2020:
Rental expense
Depreciation, amortisation
and impairment
Administrative expenses
IAS 17
£’000
(15,072)
Impact of
transition
£’000
15,072
IFRS 16
£’000
–
–
(15,072)
(11,580)
3,492
(11,580)
(11,580)
Operating profit
(15,072)
3,492
(11,580)
Adjusted operating profit
Depreciation, amortisation
and impairment
(15,072)
15,072
–
–
(11,580)
(11,580)
Interest payable on leases
Profit before tax
–
(15,072)
(2,047)
1,445
(2,047)
(13,627)
From 1 May 2019, leases are recognised as a right-of-use asset
with a corresponding liability at the date at which the lease asset
is available for use by the Group.
Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
re-measurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made on or before
the commencement date, less any lease incentives received.
Right-of-use assets are depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
Right-of-use assets are recognised within property, plant
and equipment.
Lease liabilities are initially measured at the net present value
of lease payments to be made over the lease term. The lease
payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the
Group exercising the option to terminate.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is
not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is re-measured if there
is a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
Extension and termination options are included in several of the
property leases across the Group. The Group determines the
lease term as the non-cancellable term of the lease, together
with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any period covered by an
option to terminate the lease if it is reasonably certain not to be
exercised. The Group applies judgement in evaluating whether it
is reasonably certain to exercise an option to renew or terminate
a lease. Management considers all facts and circumstances that
create an economic incentive to exercise an extension option, or
not exercise a termination option. After the commencement
date, the Group reassesses the lease term if there is a
significant event or change in circumstances that is within its
control and affects its ability to exercise, or not to exercise, the
option to renew or terminate the contract.
Payments associated with short-term leases and leases of
low-value assets (with a value of less than £5,000) are
recognised on a straight-line basis as an expense in the income
statement. Short-term leases have a term of 12 months or less.
1.21.1 The following amendments have been adopted in
the year:
− IFRS 9, ‘Financial instruments’ on prepayment features with
negative compensation
− IAS 28, ‘Investments in associates’, on long term interests in
associates and joint ventures
− IAS 19, ‘Employee benefits’ Plan amendment, curtailment or
settlement’
− Annual improvements 2015-2017
− IFRIC 23 ‘Uncertainty over income tax’
The above interpretations and revised standards have not had
any material impact on the amounts reported in these financial
statements or the disclosures required.
1.22 IFRS not yet applied
The following IFRSs have been issued but have not been applied
by the Group in these consolidated financial statements.
Their adoption is not expected to have a material effect on the
financial information unless otherwise indicated:
− Amendment to IFRS 3, Business combinations
− Amendments to References to the Conceptual Framework in
IFRS Standards
− Definition of Material (Amendments to IAS 1 and IAS 8)
− Interest Rate Benchmark Reform (Amendments to IFRS 9,
IAS 39 and IFRS 7)
− COVID-19-Related Rent Concessions (Amendment to IFRS 16)
1.23 Re-presentation of prior year
The prior-period financial results have been re-presented for the
impact of discontinued operations (note 11).
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
120
1. Accounting policies continued
1.24 Accounting estimates and judgement
The preparation of the financial statements under IFRS requires
management to make judgements, estimates and assumptions
which affect the financial information. The estimates and
associated assumptions are based on historical experience and
other factors that are considered to be relevant and are
reviewed on an ongoing basis.
The key areas of judgements, estimate and assumptions relate
to the fair value of unbilled revenue, impairment of trade
receivables, professional indemnity provisions and control over
ABS and non-ABS Groups.
Critical judgements in applying the Group’s
accounting policies
Control over the ABS and non-ABS Groups
Regulations in certain jurisdictions in which the Group is
represented allow Alternative Business Structures (‘ABS’) where
legal firms can be owned by non-lawyers. This is not the case in
other jurisdictions (‘non-ABS’). As a result, DWF LLP, the head of
the non-ABS Group, is not directly owned by any entity within
the ABS Group (which includes the ultimate parent DWF Group
plc). Consolidation of DWF LLP and the other non-ABS entities
depends on the assessment of whether a member of the ABS
Group is exposed, or has rights, to variable returns from its
involvement with such entity and has the ability to affect those
returns through its power over such entity. DWF LLP and the
other non-ABS entities are consolidated in these financial
statements on the basis of the Governance Deed adopted by
the Group.
Professional indemnity insurance claims
There is significant judgement in the recognition and
quantification of the liability associated with claims and
regulatory proceedings. Recognition is based on the assessed
likelihood of an individual claim’s success. When the outflow
is both probable and can be estimated reliably, a liability is
recognised for the best estimate of the gross liability with
a separate asset recognised for any portion that the Group will
recover from its insurers. Where the payment is not probable
or cannot be estimated reliably no liability is recognised.
Gross liability is recognised in other payables and the related
asset is recognised in other receivables in the consolidated
statement of financial position.
Business combinations – acquisition date
In accordance with IAS 1.122, management has made
judgements in respect of when control was obtained for the
acquisitions of subsidiaries. This included evaluating when
power over the relevant activities of the subsidiaries was
obtained, including an assessment of both the existing rights
that gave the current ability to direct the relevant activities and
protective rights.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key
sources of estimation uncertainty at the reporting period that
may have a significant risk of causing material adjustment of the
carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Unbilled revenue
The valuation of unbilled revenue is based on an estimate of the
amount expected to be recoverable from clients on unbilled
matters based on the time spent at a rate which is defined by
factors including time spent, the expertise and skills provided,
and expenses incurred. Provisions are made for such factors as
historical recoverability rates, contingencies, the outcomes of
previous matters and agreements with clients.
Respective amounts are provided in note 15.
Management considers the values of unbilled revenue and the
trade receivables provision to be material and have reviewed the
significant risk of material change within the next financial year
as required by IAS 1:125, no material change is expected due to
the historic rates applied by the Group expected to only change
by immaterial amounts. No sensitivity analysis has therefore
been provided.
Trade receivables provision
The valuation of amounts recoverable and not recoverable on
trade receivables involves significant estimation. The estimation
of provisions is established based on interactions between
finance, the fee earner and clients, mindful of the specific
circumstances of clients and individual matters and invoices
and guided by calculation rules applied to the aged population
of all trade receivables (excluding those already addressed
by more specific provisions). Bad debt provision amounting
to £11,871,000 was provided at 30 April 2020 (30 April
2019: £6,534,000). Further details of trade receivables ageing
and provision movement are provided in note 15.
IFRS 9 Financial instruments requires the expected credit losses
to be measured using an unbiased and probability-weighted
amount that is determined by evaluating a range of possible
outcomes, the time value of money and reasonable and
supportable information that is available without undue cost or
effort at the reporting date about past events, current conditions
and forecasts of future economic conditions. IFRS 9 allows
practical expedients to be used when measuring credit losses.
The Group has elected to use a provision matrix based on the
ageing profit of debts and the historical credit loss rates adjusted
by a forward looking estimate that includes the probability of
a worsening domestic economic environment/specific
conditions to a particular client over the coming quarters.
Management considers the values of unbilled revenue and the
trade receivables provision to be material and have reviewed the
significant risk of material change within the next financial year
as required by IAS 1:125, no material change is expected due to
the historic rates applied by the Group expected to only change
by immaterial amounts. No sensitivity analysis has therefore
been provided.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 121
2. Alternative performance measures
Alternative performance measures are not intended to supplant IFRS measures. In line with investor feedback and to provide
readers of the financial statements with additional understanding of the trading performance of the Group, adjusted earnings
before interest, tax, depreciation and amortisation (‘EBITDA’) has been calculated as profit before tax after adding back:
− impairment and amortisation of intangible assets – acquired;
− non-underlying items;
− share-based payments expense;
− gain on bargain purchase;
− net finance expense; and
− depreciation, amortisation and impairment.
Owing to the change in partner remuneration structure effected on 15 March 2019 together with the application of IFRS 16 Leases
effected on 1 May 2019, Underlying Adjusted EBITDA is presented to allow for greater comparability of financial performance
between each period. Underlying Adjusted EBITDA is calculated as Adjusted EBITDA less the internally reported partner
remuneration pro-forma adjustment and the impact of the transition to IFRS 16.
In addition, underlying adjusted PBT is presented as adjusted PBT less the internally reported partner remuneration pro-forma
adjustment and the impact of transition to IFRS 16. Lastly, the cost to income ratio is used to assess the levels of operational
gearing in the Group. The cost to income ratio is defined as administrative expenses less non-underlying items, share-based
payment expense and the impact of the transition to IFRS 16 divided by net revenue. Adjusted profit before tax, adjusted EBITDA
and underlying adjusted EBITDA reconcile to profit on continuing activities before tax as follows:
Profit before tax (‘PBT’)
Amortisation of intangible assets – acquired
Impairment
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Adjusted PBT
Depreciation of right-of-use asset (note 1.21)
Other depreciation and amortisation
Interest payable on leases (note 1.21)
Net finance expense
Adjusted operating profit (‘Adjusted EBITDA’)
Internally reported partner remuneration pro-forma adjustment (Note 30)
Impact of the transition to IFRS 16 (Note 1.21)
Underlying adjusted EBITDA
Underlying adjusted PBT reconciles to Adjusted PBT as follows:
Adjusted PBT
Internally reported partner remuneration pro-forma adjustment (Note 30)
Impact of the transition to IFRS 16 (Note 1.21)
Underlying adjusted PBT
Re-presented
(note 1.23)
2019
£’000
13,034
–
–
–
12,569
1,202
26,805
–
5,365
–
2,131
34,301
(6,456)
–
27,845
Re-presented
(note 1.23)
2019
£’000
26,805
(6,456)
–
20,349
2020
£’000
18,198
1,510
382
(25,084)
7,632
12,570
15,208
11,580
6,175
2,047
1,905
36,915
–
(15,072)
21,843
2020
£’000
15,208
–
(1,445)
13,763
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
122
2. Alternative performance measures continued
The cost to income ratio is calculated as follows:
Net revenue
Administrative expenses
Amortisation of intangible assets – acquired
Impairment
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Impact of transition to IFRS 16
Adjusted administrative expenses
Cost to income ratio
Re-presented
(note 1.23)
2019
£’000
268,136
128,264
–
–
–
(12,569)
(1,202)
–
114,493
42.7%
2020
£’000
297,231
120,804
(1,510)
(382)
25,084
(7,632)
(12,570)
3,492
126,566
42.6%
3. Operating segments
Reporting segments
In accordance with IFRS 8 the Group’s operating segments are based on the operating results reviewed by the Board, who
represents the chief operating decision maker (‘CODM’). The Group has the following four strategic divisions, which are its
reportable segments. These divisions offer different services and are reported separately because of different specialisms from
the teams in the business Group.
The following summary describes the operations of each reportable segment:
Reportable segment
Commercial Services
Insurance Services
International
Connected Services
Operations
Provides commercial legal services, encompassing our Corporate Services,
Litigation and Real Estate practice groups.
Provides insurance legal services, encompassing our Professional Indemnity &
Commercial, Catastrophic Personal Injury & Occupational Health, and Motor, Fraud
& Claimant practice groups.
A division focussed on supporting clients on a global scale, with a sector-focussed
approach to grow a client-orientated practice.
Encompasses various independent businesses that work alongside, support and
deliver products and services to our legal teams and clients.
The revenue and operating profit are attributable to the principal activities of the Group. Information relating to each reportable
segment is set out below:
For year ended 30 April 2020
Segment net revenue
Direct costs
Reported gross profit
Administrative expenses
Operating profit
Net finance expense
Profit before tax
Taxation
Profit from continuing operations
Commercial
Services
£’000
104,367
(45,960)
58,407
Insurance
Services
£’000
95,838
(49,726)
46,112
International
£’000
76,165
(45,188)
30,977
Connected
Services
£’000
20,861
(14,123)
6,738
Total
£’000
297,231
(154,977)
142,234
(120,084)
22,150
(3,952)
18,198
(3,629)
14,569
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
For year ended 30 April 2019 (re-presented (note 1.23))
Restated
Segment net revenue
Direct costs
Gross profit
Administrative expenses
Operating profit
Net finance expense
Profit before tax
Taxation
Profit from continuing operations
Commercial
Services
£’000
108,885
(40,499)
68,386
Insurance
Services
£’000
91,062
(44,532)
46,530
International
£’000
49,729
(28,123)
21,606
Connected
Services
£’000
18,460
(11,553)
6,907
For year ended 30 April 2019 – Underlying adjusted (re-presented (note 1.23))
Segment net revenue
Direct costs
Revised compensation model adjustment
Underlying gross profit
Commercial
Services
£’000
108,885
(40,499)
(3,792)
64,594
Insurance
Services
£’000
91,062
(44,532)
(2,555)
43,975
International
£’000
49,729
(28,123)
–
21,606
Connected
Services
£’000
18,460
(11,553)
(109)
6,798
123
Re-presented
(note 1.23)
Total
£’000
268,136
(124,707)
143,429
(128,264)
15,165
(2,132)
13,034
(138)
12,896
Re-presented
(note 1.23)
Total
£’000
268,136
(124,707)
(6,456)
136,973
There are no intra-segmental revenues which are material for disclosure. Administrative expenses represent non-direct costs that
are not specifically allocated to segments.
Revenue by Region
The UK is the Group’s country of domicile and the Group generates the majority of its revenue from external clients in the UK.
The geographical analysis of revenue is on the basis of the country of origin in which the client is invoiced:
UK
Rest of Europe
Middle East
Rest of World
Net revenue
Re-presented
(note 1.23)
2019
£’000
220,486
19,807
9,871
17,972
268,136
2020
£’000
218,562
45,905
6,702
26,062
297,231
Total assets and liabilities for each reportable segment are not presented as such information is not provided to the CODM.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
124
4. Operating profit and Auditor’s remuneration
Recognised in the income statement
Members’ remuneration charged as an expense
Net foreign exchange loss
Impairment of intangible assets – continuing operations
Impairment of intangible assets – discontinued operations
Amortisation of intangible assets – acquired
Amortisation of intangible assets – software and capitalised development costs
Depreciation of tangible assets
Depreciation of right-of-use asset
Operating lease cost on land and buildings
Short-term and low-value lease cost
Operating lease cost of other leases
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Auditor’s remuneration
Audit of the Group financial statements
Amounts payable to the Company’s Auditor and its associates in respect of:
Audit of financial information of subsidiary undertakings and partnerships of the Group
Other assurance services
Tax advisory services
Other assurance services
Other services
Total fees
Non-underlying items are set out in the table below:
Acquisition-related advisory fees – successful
Acquisition-related advisory fees – aborted
Acquisition-related remuneration expense
COVID-19 related costs
IPO-related advisory fees
Non-underlying items
Notes
2020
£’000
Re-presented
(note 1.23)
2019
£’000
13
13
12
12
38,808
517
382
654
1,510
1,504
4,671
11,580
–
1,310
–
(25,084)
7,632
12,570
340
144
–
–
43
161
688
2020
£’000
2,639
1,542
2,876
230
345
7,632
31,014
545
–
–
–
1,017
4,348
–
12,261
–
1,202
–
12,569
1,202
250
120
2,500
626
–
105
3,601
2019
£’000
–
–
–
–
12,569
12,569
Acquisition-related remuneration expense does not reflect the ongoing employment costs of the individuals retained as part of the
acquisition agreement. The ongoing employment costs of these individuals is expensed in direct costs.
COVID-related costs include, inter-alia, specialist cleaning and additional IT support costs that are non-recurring.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
5. Net finance expense
Finance income
Interest receivable
Finance expense
Interest payable on bank borrowings
Other interest payable
Bank and other charges
Net finance expense
Finance expense – leases
Interest payable on leases
6. Taxation
UK corporation tax on profit
Foreign tax on profit
Adjustments in respect of prior periods
Current tax expense
Deferred tax credit
Adjustments in respect of prior periods
Deferred tax expense
Taxation
Factors affecting the tax charge for the year:
125
2019
£’000
293
293
1,057
279
1,088
2,424
2,131
–
–
Re-presented
(note 1.23)
2019
£’000
237
145
53
435
(297)
–
(297)
138
2020
£’000
456
456
1,655
165
541
2,361
1,905
2,047
2,047
2020
£’000
4,746
1,347
97
6,190
(2,587)
26
(2,561)
3,629
The effective tax rate is higher (2019: lower) than the average rate of corporate tax in the UK of 19% (2019: 19%). The difference is
explained below:
Profit before taxation
Tax on Group profit at standard UK corporation tax rate of 19% (2019: 19%)
Tax borne by individual members of partnerships within the Group
Foreign tax rate differences
Non-taxable income
Non-deductible expenses
Adjustments in respect of prior periods
Brought forward tax losses utilised
Tax losses not recognised as assets
Effect on deferred tax of change in corporation tax rate
Group total tax charge for the year
Re-presented
(note 1.23)
2019
£’000
13,034
2,476
(4,708)
20
(135)
2,479
53
–
–
(47)
138
2020
£’000
18,198
3,458
–
917
(4,766)
3,326
123
(28)
706
(107)
3,629
On 18 November 2019, the UK Government cancelled plans to reduce the corporation tax rate from 19% to 17% from 1 April 2020.
Deferred tax assets and liabilities are measured at the rates that are expected to apply in the periods of the reversal so UK deferred
tax assets and liabilities previously measured at 17% are now measured at 19%.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
126
7. Dividends
Distributions to owners of the parent in the year:
FY 2019 final dividend
FY 2020 first interim dividend
FY 2020 second interim dividend
Total dividends paid in the year
Final dividend proposed
FY 2019 final dividend
FY 2020 first interim dividend
FY 2020 second interim dividend
Total dividends paid in the year
Final dividend proposed
2020
pence
per share
1.00p
1.25p
1.25p
3.50p
0.75p
2020
£’000
2,746
3,428
3,637
9,811
2,434
2019
pence
per share
–
–
–
–
–
2019
£’000
–
–
–
–
–
The first interim dividend of 1.25 pence per share was approved by the Board on 13 November 2019. The dividend was paid on
20 December 2019 to all shareholders on the Register of Members on 22 November 2019. The payment of this dividend did not
have any tax consequences for the Group.
The second interim dividend of 1.25 pence per share was approved by the Board on 16 January 2020. The dividend was paid on
21 February 2020 to all shareholders on the Register of Members on 24 January 2020. The payment of this dividend did not have
any tax consequences for the Group.
The proposed final dividend of 0.75 pence per share was approved by the Board on 7 September 2020 and is subject to approval
by shareholders at the Annual General Meeting in October. The final dividend has not been included as a liability in these financial
statements. The proposed dividend is payable to all shareholders on the Register of Members on 25 September 2020. The dividend
will be paid on 5 November 2020. The payment of this dividend will not have any tax consequences for the Group.
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings from continuing operations for the purpose of basic and diluted earnings per share
Losses from discontinued operations for the purpose of basic and diluted earnings per share
Earnings from all operations for the purpose of basic and diluted earnings per share
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Earnings from continuing operations per share attributable to the owners of the parent:
Basic earnings per share
Diluted earnings per share
Earnings from discontinued operations per share attributable to the owners of the parent:
Basic earnings per share
Diluted earnings per share
Earnings from all operations per share attributable to the owners of the parent:
Basic earnings per share
Diluted earnings per share
Re-presented
(note 1.23)
2019
£’000
12,896
(712)
12,184
2020
£’000
14,569
(4,301)
10,268
Re-presented
(note 1.23)
Number
271,406,294 269,221,068
Number
5,087,543
3,969,034
276,493,837 273,190,102
5.4p
5.3p
(1.6)p
(1.6)p
3.8p
3.7p
4.8p
4.7p
(0.3)p
(0.3)p
4.5p
4.5p
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
127
Adjusted earnings per share is included as an Alternative Performance Measure (‘APM’). Adjusted earnings per share is not
presented in accordance with IAS 33. Adjusted earnings per share has been calculated using adjusted earnings calculated as profit
after taxation but before:
− non-underlying items;
− share-based payments expense;
− gain on bargain purchase;
− amortisation of acquired intangible assets;
− impairment;
− the tax effect of the above items; and
− in the prior year only, a tax adjustment included on a pro-forma basis to reflect a full year of normalised tax charge as if the
corporate structure was in effect for the full year.
The calculation of adjusted basic and adjusted diluted earnings per share is based on:
Earnings from continuing operations for the purpose of basic and diluted earnings per share
Add/(remove):
Impairment
Amortisation of intangible assets – acquired
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Tax effect of adjustments above
Pro-forma tax adjustment
Adjusted earnings for the purposes of adjusted earnings per share
Re-presented
(note 1.23)
2019
£’000
12,896
–
–
–
12,569
1,202
(204)
(5,275)
21,188
2020
£’000
14,569
382
1,510
(25,084)
7,632
12,570
(2,394)
–
9,185
Weighted average number of ordinary shares for the purposes of adjusted earnings per share
Add:
Additional shares held in trust
Weighted average number of ordinary shares for the purposes of adjusted basic earnings per share
Effect of dilutive potential ordinary shares:
3,969,034
Future exercise of share awards and options
Weighted average number of ordinary shares for the purposes of adjusted diluted earnings per share 307,893,998 300,000,000
7.2p
Adjusted basic earnings per share
7.1p
Adjusted diluted earnings per share
26,809,898
302,806,455 296,030,966
31,400,161
3.0p
3.0p
5,087,543
Re-presented
(note 1.23)
Number
271,406,294 269,221,068
Number
Tax adjustments of £2,394,000 (2019: £5,479,000) have been made in arriving at the adjusted earnings per share. This is based on
an estimated full year equivalent effective tax rate of 21%, which is largely driven by the UK corporation tax rate of 19% adjusted
upwards to take into account the effect of non-deductible expenses and higher overseas tax rates in certain territories.
Shares held in trust are i) issued shares that are owned by the EBT and RST and are recognised, on consolidation, as treasury
shares; less ii) the future exercise of share awards and options.
9. Results of DWF Group plc
DWF Group plc, the parent company, recorded a loss of £12,886,000 during the year to 30 April 2020 (the period ended 30 April
2019: £3,324,000).
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
128
10. Acquisitions of subsidiaries
Acquisitions in the year to 30 April 2020
Where applicable, acquisition-related remuneration expense does not reflect the ongoing employment costs of the individuals
retained as part of the acquisition agreement. The ongoing employment costs of these individuals is expensed in direct costs.
a) Rousaud Costas Duran S.L.P. – Spain
On 20 December 2019, DWF Spain S.L.P., an indirect subsidiary of DWF Group plc, acquired 48% of the issued share capital of
Rousaud Costas Duran S.L.P. (‘RCD’), a legal services business registered and operating in Spain. The remaining 52% of the share
capital was acquired by DWF Group plc, who then sold its 52% shareholding to DWF Spain S.L.P. This transaction expands the
Group’s geographic footprint.
The Sellers consist of nine former equity partners who have all been retained as employees following the sale of the business.
A total purchase price of £38.5m (or €45.2m) was agreed between DWF Group plc and the Sellers. This is comprised of the
following components.
− £6.3m (or €7.4m) initial cash payment paid on completion. This amount is linked to the continuing employment of the Sellers for
a period of up to two years following completion. This cash outflow is accounted for as remuneration. It is initially recorded as
a prepaid expense in the consolidated statement of financial position and is subsequently recorded as an expense in the income
statement (classified as a non-underlying item) vesting evenly over the two-year period.
− £9.4m (or €11.0m) deferred cash payments are due in four equal instalments over a period up to December 2021. These cash
payments are also linked to the continuing employment of the Sellers. These future cash outflows are accounted for as
remuneration. An expense in the income statement (classified as a non-underlying item) is recognised evenly over the two-year
period.
− £1.8m (or €2.1m) deferred cash payments are due in two instalments up to November 2020. This cash outflow is accounted for
as consideration within the scope of IFRS 3 Business combinations.
− £1.7m (or €2.0m) deferred cash payments are payable contingent on RCD achieving stretching EBITDA targets for FY20.
No continuing employment clause is linked to this payment. This cash outflow is accounted for as contingent consideration within
the scope of IFRS 3 Business combinations.
− £9.1m (or €10.7m) shares issued in five equal tranches that vest separately to the Sellers over a period of between one and five
years to December 2024 contingent on continuing employment of the Sellers. This is accounted for within the scope of IFRS 2
Share-based payments.
− £9.1m (or €10.7m) shares issued in five equal tranches that vest separately to the Sellers over a period of between one to five
years to December 2024 contingent on continuing employment of the Sellers and stretching EBITDA targets. This is accounted for
within the scope of IFRS 2 Share-based payments.
− £1.1m (or €1.3m) shares issued with no continuing employment or performance conditions attached. This is accounted for as
consideration within the scope of IFRS 3 Business combinations. The fair value of the consideration was based, inter-alia, on the
share price (1.25 pence per ordinary share) on the date of completion.
In summary, the purchase price of £38.5m (or €45.2m) is split and is accounted for as follows:
− Consideration
− Remuneration
− Remuneration
£4.6m (or €5.4m)
£15.7m (or €18.4m)
£18.2m (or €21.4m)
IFRS 3 Business combinations
IAS 19 Employee benefits
IFRS 2 Share-based payments*
* The fair value of this expense has been calculated using the methodology as set out in note 25. A £18.2m share-based payment expense for the period to
December 2024 has been calculated.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 Details of the consideration paid and the fair value of net assets acquired are as follows:
Consideration paid
Deferred cash consideration
Deferred and contingent cash consideration
Initial share consideration
Fair value of consideration
Less:
Intangible assets – customer relationships
Intangible assets – brand
Intangible assets – software
Property, plant and equipment
Trade receivables
Other receivables
Cash
Trade payables
Other payables
Other interest bearing loans and borrowings
Deferred tax liability
Fair value of net assets acquired
Gain on bargain purchase
129
Rousaud Costas
Duran S.L.P.
Provisionally
recognised fair
value on
acquisition
£’000
1,805
1,736
1,097
4,638
25,751
536
19
767
8,052
5,145
(1,242)
(2,017)
(4,518)
(184)
(6,572)
25,737
(21,099)
The fair value of acquired trade receivables is £8.1m. The gross contractual amount for trade receivables due is £10.2m with a loss
allowance of £2.1m recognised on acquisition.
A £21.1m gain on bargain purchase has been recognised within administrative expenses. Remuneration expense of £2.7m is
recorded in the year in the income statement classified in non-underlying items. A share-based payment expense of £3.0m relating
to the RCD acquisition is recorded in the income statement in the year.
Acquisition-related remuneration expense does not reflect the ongoing employment costs of the individuals retained as part of the
acquisition agreement. The ongoing employment costs of these individuals is expensed in direct costs.
The acquired business contributed revenues of £12,465,000 to the group for the period from 20 December 2019 to 30 April 2020.
Acquisition-related advisory costs of £1.1m are included in the income statement classified in non-underlying items.
Cash flow impact
No cash consideration has been paid in the year. Remuneration linked purchase price of £6,404,000 has been paid in the year –
this is included in the statement of cash flows as cash used to settle non-underlying items.
b) K&L Gates Jamka sp.k (‘K&L Gates’) – Poland
On 20 May 2019, DWF Law LLP, a partnership controlled by DWF Group plc, acquired the legal services business K&L Gates which is
registered and operates in Poland. The acquisition expands the Group’s geographic footprint. This was achieved through the acquisition
of 100% of the share capital of the corporate partner, which is the only limited partner of the underlying trading partnership.
The transaction resulted in DWF Law LLP obtaining control of K&L Gates and the underlying partnership from 1 May 2019.
Total consideration has been provisionally estimated at £3,015,000, which results in a gain on bargain purchase of £2,772,000
(recognised within administrative expenses as a non-underlying item).
Initial consideration on completion of £605,000 was paid on 22 May 2019. Deferred consideration is variable based on the cash
conversion of acquired work in progress and trade receivables. As a result, total consideration may increase or decrease, or may be
deferred beyond the agreed instalment dates until the acquired assets convert to cash. Deferred consideration, subject to any
adjustment for cash conversion, of £2,410,000 is payable in instalments over 18 months as follows:
− £247,000 VAT refund payable within 14 days of receipt
− £811,000 (30%) in November 2019
− £811,000 (30%) in May 2020
− £541,000 (20%) in November 2020.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
130
10. Acquisitions of subsidiaries continued
Details of the consideration paid and the fair value of net assets acquired are as follows:
Consideration paid
Initial cash consideration paid
Deferred consideration
Fair value of consideration
Less:
Intangible assets – customer relationships
Property, plant and equipment
Trade receivables
Other receivables
Cash
Trade payables
Other payables
Deferred tax liability
Fair value of net assets acquired
K&L Gates
Jamka sp.k
Provisionally
recognised fair
value on
acquisition
£’000
K&L Gates
Jamka sp.k
Adjustments to
fair value on
acquisition
£’000
K&L Gates
Jamka sp.k
Final recognised
fair value on
acquisition
£’000
605
2,408
3,013
–
301
2,177
455
877
(346)
(254)
–
3,210
–
2
2
3,095
–
(842)
771
–
141
–
(588)
2,577
605
2,410
3,015
3,095
301
1,335
1,226
877
(205)
(254)
(588)
5,787
Gain on bargain purchase
(197)
(2,575)
(2,772)
The fair value of the acquired trade receivables is £1,336,000. The gross contractual amount for trade receivables due is £1,833,000,
with a loss allowance of £497,000 recognised on acquisition.
The acquired business contributed revenues of £9,425,000 to the group for the period from 1 May 2019 to 30 April 2020.
Acquisition-related advisory costs of £0.8m are included in the income statement classified in non-underlying items.
Cash flow impact
Cash consideration of £1,663,000 has been paid in the year.
c) Mindcrest Inc.
On 28 February 2020 DWF US Group LLC, a 100% owned subsidiary of DWF Group plc, acquired 54% of the issued share capital
of Mindcrest Inc., a managed services legal business registered and operating in the USA, with subsidiary operations in the UK and
India. DWF Group plc acquired the remaining 46% of the issued share capital of Mindcrest Inc. DWF Group plc then contributed
their 46% shareholding in Mindcrest Inc. at its market value of $8.4m to DWF US Group LLC in exchange for one newly-issued
share in DWF US Group LLC, making them the sole shareholder of Mindcrest Inc. The group obtained control from the date of
exchange on 28 January 2020. This transaction expands DWF’s managed services offerings.
A total purchase price of £14.2m (or $18.4m) was agreed between DWF Group plc and the Sellers. This is comprised of the
following components.
− £1.8m (or $2.3m) initial cash payment paid on completion to the Sellers. £0.7m (or $0.8m) of this initial cash payment is linked to
the continuing employment of certain key individuals for a period of up to two years following completion. This cash outflow is
accounted for as remuneration. It is initially recorded as a prepaid expense in the consolidated statement of financial position and
is subsequently recorded as an expense in the income statement (classified as a non-underlying item) vesting evenly over the
two-year period. The remaining £1.1m (or $1.5m) initial cash payment is accounted for as consideration within the scope of IFRS 3
Business Combinations.
− £5.9m (or $7.7m) deferred cash payments are due over a six-month period to August 2020. £2.1m (or $2.7m) of these deferred
cash payments are linked to the continuing employment of certain key individuals for a period of up to two years following
completion. This cash outflow is accounted for as remuneration recognised evenly in the income statement (classified as a
non-underlying item) over the period to February 2022. The remaining £3.8m (or $5.0m) deferred cash payments are accounted for
as consideration within the scope of IFRS 3 Business combinations.
− £3.3m (or $4.2m) shares issued on completion that vest to the Sellers on publication of the FY2021 results. This is accounted for
within the scope of IFRS 3 Business combinations. The fair value of the consideration was based, inter-alia, on the share price
(1.29 pence per ordinary share) on the date of completion.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
131
− £3.3m (or $4.2m) shares issued on completion that vest to the Sellers on publication of the FY2022 results that are subject to
a contingent non-stretching threshold revenue growth clause for the years ending 31 December 2020 and 31 December 2021.
This is accounted for within the scope of IFRS 3 Business Combinations. The fair value of the consideration was based, inter-alia,
on the share price (1.29 pence per ordinary share) on the date of completion.
In summary, the purchase price of £14.2m (or $18.5m) is split and is accounted for as follows:
− Consideration
− Remuneration
£11.5m (or $14.9m)
£2.7m (or $3.6m)
IFRS 3 Business combinations
IAS 19 Employee benefits
Details of the consideration paid and the fair value of net assets acquired are as follows:
Consideration paid
Initial cash consideration
Deferred cash consideration
Initial share consideration
Initial contingent share consideration
Fair value of consideration
Less:
Intangible assets – customer relationships
Intangible assets – brand
Intangible assets – software
Property, plant and equipment
Deferred tax asset
Trade receivables
Other receivables
Cash
Trade payables
Other payables
Other interest-bearing loans and borrowings
Deferred tax liability
Fair value of net assets acquired
Goodwill
Mindcrest
Inc.
Provisionally
recognised fair
value on
acquisition
£’000
1,143
3,821
3,236
3,236
11,436
5,036
1,149
15
103
86
1,047
705
98
(60)
(3,609)
(590)
(1,670)
2,310
9,126
The fair value of the acquired trade receivables is £1.0m. The gross contractual amount for trade receivables due is £1.1m, with
a loss allowance of £0.1m recognised on acquisition.
Goodwill of £9.1m has been recognised on acquisition relates to the benefit of operating an already well established business in
a low cost environment in India. Remuneration expense of £0.2m is recorded in the year in the income statement classified in
non-underlying items.
Acquisition-related remuneration expense does not reflect the ongoing employment costs of the individuals retained as part of the
acquisition agreement. The ongoing employment costs of these individuals is expensed in direct costs.
The acquired business contributed revenues of £3,319,777 to the group for the period from 28 January 2020 to 30 April 2020.
Acquisition-related advisory costs of £0.7m are included in the income statements classified in non-underlying items.
Cash flow impact
Cash consideration of £1,811,000 has been paid in the year. Remuneration linked purchase price of £991,000 has been paid in the
year – this is included in the statement of cash flows as cash used to settle non-underlying items.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
132
10. Acquisitions of subsidiaries continued
d) McDonald Johnson
On 21 November 2019 DWF Law Australia Pty Ltd (‘DWF’) purchased the trade and assets of McDonald Johnson (‘the Business’).
As part of this arrangement, on 1 December 2019 DWF acquired the net assets of the Business, and commenced employment of
the Seller and Relevant Employees. Although the transaction was completed on 21 November 2019, the Group obtained control on
1 December 2019. This transaction expands the Group’s geographic presence in Australia.
Total consideration has been calculated at £78,855, which results in a gain on bargain purchase of £1,213,000 (recognised within
administrative expenses as a non-underlying item).
Details of the consideration paid and the fair value of net assets acquired are as follows:
Consideration paid
Initial cash consideration paid
Fair value of consideration
Less:
Intangible assets – customer relationships
Other receivables
Deferred tax liability
Fair value of net assets acquired
Gain on bargain purchase
McDonald
Johnson
Provisionally
recognised fair
value on
acquisition
£’000
79
79
1,527
237
(472)
1,292
(1,213)
The acquired business contributed revenues of £409,000 to the group for the period from 1 December 2019 to 30 April 2020.
Cash flow impact
Cash consideration of £79,000 has been paid in the year.
e) BT Law Limited
On 23 July 2019 DWF was appointed as strategic legal partner of BT. As a result of this appointment, on 31 October 2019, DWF Law
LLP, a partnership controlled by DWF Group plc, acquired the share capital of the legal services business BT Law Limited, which is
registered and operates in the United Kingdom. Consideration equal to the net asset value of the business is provisionally estimated
at £84,000 and was paid on 1 November 2019. Net assets acquired included £51,000 of cash.
Acquisitions in the year to 30 April 2019
There were no material acquisitions during the year.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
133
11. Discontinued operations
On 30 April 2020, the Group disposed of the business of the Cologne office in Germany and the results of that business are
reported in the current period as a discontinued operation. Financial information relating to the discontinued operation for the period
is set out below.
Net revenue
Direct costs
Gross profit
Administrative expenses
Operating profit
Adjusted operating profit
Depreciation, amortisation and impairment
Loss before tax
Taxation
Loss from discontinued operations
2020
£’000
3,171
(2,184)
987
(5,288)
(4,301)
(3,647)
(654)
(4,301)
–
(4,301)
2019
£’000
4,225
(2,164)
2,061
(2,773)
(712)
(712)
–
(712)
–
(712)
Further discontinuation and scale back programmes
In a trading statement on 9 July 2020, the Board announced further disposals, closures and scaling back programmes in Brussels,
Singapore and Dubai as well as for DWF Resource (a part of the Connected Services division). The results for these business are not
treated as discontinued in the period as the decision was taken after the year end. These operations represented c.1.5% of the
Group’s revenues and generated a £4.5m EBITDA loss in FY20.
12. Intangible assets and goodwill
Cost
At 1 May 2019
Additions through acquisitions
Additions – internally developed
Additions – externally purchased
Effect of movements in foreign exchange
At 30 April 2020
Amortisation and impairment
At 1 May 2019
Amortisation for the year
Impairment
Effect of movements in foreign exchange
At 30 April 2020
Net book value
At 30 April 2020
At 1 May 2019
Acquired
Customer
relationships
£’000
–
35,410
–
–
(199)
35,211
–
1,351
–
–
1,351
Goodwill
£’000
2,589
9,126
–
–
(24)
11,691
319
–
1,036
1
1,356
Brand
£’000
–
1,685
–
–
–
1,685
–
159
–
–
159
10,335
2,270
33,860
–
1,526
–
External
software costs
£’000
Capitalised
development
costs
£’000
1,580
35
–
293
15
1,923
538
469
–
–
1,007
916
1,042
3,260
–
3,823
–
–
7,083
2,031
1,035
–
–
3,066
4,017
1,229
Total
£’000
7,429
46,256
3,823
293
(208)
57,593
2,888
3,014
1,036
1
6,939
50,654
4,541
The impairment expense includes £654,000 relating to the discontinued operation (see note 11). The remaining impairment expense
of £382,000 relates to DWF 360 (a part of the Connected Services division) following a year of poor performance relating to assets
acquired as part of the historic acquisition.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
134
12. Intangible assets and goodwill continued
Individual intangible assets that are material to the financial statements are set out below:
− Customer relationships – Spain: Net book value at 30 April 2020 £24,898,000 (2019: £nil) – remaining amortisation period is
9.6 years
− Customer relationships – Managed Services (Mindcrest): Net book value at 30 April 2020 £4,912,000 (2019: £nil) – remaining
amortisation period is 9.8 years
− Customer relationships – Poland: Net book value at 30 April 2020 £2,784,000 (2019: £nil) – remaining amortisation period is
9.0 years
− Customer relationships – McDonald Johnson: Net book value at 30 April 2020 £1,463,000 (2019: £nil) – remaining amortisation
period is 9.6 years
− Capitalised development costs – Managed Services: Net book value at 30 April 2020 £1,600,000 (2019: £nil) – remaining
amortisation period is 3.0 years
Acquired
Goodwill
£’000
Customer
relationships
£’000
Brand
£’000
External
software costs
£’000
Capitalised
development
costs
£’000
Cost
At 1 May 2018
Additions through acquisitions
Additions – internally developed
Additions – externally purchased
Effect of movements in foreign exchange
At 30 April 2019
Amortisation and impairment
At 1 May 2018
Amortisation for the year
Effect of movements in foreign exchange
At 30 April 2019
Net book value
At 30 April 2019
At 1 May 2018
2,052
535
–
–
2
2,589
321
–
(2)
319
2,270
1,731
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
943
–
–
639
(2)
1,580
152
386
–
538
1,042
791
2,679
–
581
–
–
3,260
1,400
631
–
2,031
1,229
1,279
Total
£’000
5,674
535
581
639
–
7,429
1,873
1,017
(2)
2,888
4,541
3,801
The above capitalised development costs relate to the development of software used internally and as products for clients of
the Group.
Goodwill
Goodwill considered significant in comparison to the Group’s total carrying amount of such assets have been allocated to cash
generating units or Groups of cash generating units as follows:
Managed Services
Other individually immaterial CGUs
2020
£’000
9,126
1,209
10,335
2019
£’000
–
2,270
2,270
Goodwill arising on business combinations is not amortised but reviewed for impairment on an annual basis, or more frequently
if there are indications that goodwill may be impaired. Impairment reviews were performed by comparing the carrying value
of goodwill with the recoverable amount of the cash generating units (‘CGU’) to which goodwill has been allocated.
Recoverable amounts for cash generating units are the higher of fair value less costs of disposal, and value in use.
Recently acquired businesses are performing in line with the investment case approved by the Board.
The recoverable amounts of the CGUs are determined from value in use calculations. The calculations have been based on
a discounted cash flow model covering a period of five years using forecast revenues and costs, extended to perpetuity. The inputs
into the model appropriately consider the relevant market maturity and local factors. The first year of the forecast is established from
the budget for FY21 which is underpinned by the business plan that has been signed off by the Board. The outer years have been
included on a consistent basis with the Board approved strategy. In each case, the calculations use a growth rate of 2% and a
pre-tax discount rate of 10-20%. These pre-tax discount rates reflect current market assessments for the time value of money and
the risks associated with the CGUs as the Group manages its treasury function on a group-wide basis. The long-term growth rates
used are based on management’s expectations of future changes in the markets for each CGU.
Significant headroom exists for each CGU. No reasonable worst-case scenario gives rise to an impairment risk. On this basis, no
sensitivity is disclosed.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
135
Total
£’000
64,145
70,342
7,395
8,169
88
150,139
50,113
16,251
66,364
83,775
14,032
Total
£’000
59,949
4,213
(17)
64,145
45,765
4,348
50,113
14,032
14,184
Right-of-use
asset
£’000
Leasehold
improvements
£’000
Office
equipment and
fixtures and
fittings
£’000
Computer
equipment
£’000
–
70,342
6,246
4,649
–
81,237
–
11,580
11,580
69,657
–
16,230
–
324
185
43
16,782
11,665
1,071
12,736
4,046
4,565
10,944
–
592
751
(5)
12,282
6,051
1,137
7,188
5,094
4,893
36,971
–
233
2,584
50
39,838
32,397
2,463
34,860
4,978
4,574
Right-of-use
asset
£’000
Leasehold
improvements
£’000
Office
equipment and
fixtures and
fittings
£’000
Computer
equipment
£’000
–
–
–
–
–
–
–
–
–
15,704
540
(14)
16,230
10,624
1,041
11,665
4,565
5,080
9,868
1,084
(8)
10,944
5,281
770
6,051
4,893
4,587
34,377
2,589
5
36,971
29,860
2,537
32,397
4,574
4,517
13. Property, plant and equipment
Cost
At 1 May 2019
Adjustment on transition to IFRS 16
Additions through acquisitions
Additions
Effect of movements in foreign exchange
At 30 April 2020
Accumulated depreciation
At 1 May 2019
Charge for the year
At 30 April 2020
Net book value
At 30 April 2020
At 1 May 2019
Cost
At 1 May 2018
Additions
Effect of movements in foreign exchange
At 30 April 2019
Accumulated depreciation
At 1 May 2018
Charge for the year
At 30 April 2019
Net book value
At 30 April 2019
At 1 May 2018
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
136
14. Investments
Investments
At the start and at the end of the year
2020
£’000
254
2019
£’000
254
The Group holds a £204,000 investment (10% interest) in Dealscoper Limited and £50,000 investment (<0.1% interest) in
Mercantile Ports and Logistics Limited; these are deemed to be approximate to the investment’s fair value based on management
information available. The Group has investments in the following undertakings, all are held as ordinary shares:
Registered address
Principal place
of business
Nature of business
Proportion
of ownership
Subsidiaries
Direct
DWF Holdings Limited
DWF Group (US) LLC4
Indirect
DWF (TG) Limited4
DWF LLP
DWF Law LLP
DWF (NI) LLP
Vueity Limited
DWF Costs Limited4
DWF Claims Limited4
DWF Advocacy Limited4
DWF Forensic Limited4
DWF Ventures Limited4
DWF Adjusting Limited4
DWF Resource Limited4
DWF Connected Services Holdings Ltd4
DWF Company Secretarial Services Limited3
Greyfern Law Limited3
Davies Wallis Foyster Limited
Davies Wallis (unlimited)1
DWF Solicitors Limited1
DWF (Trustee) Limited1
DWF Nominees Limited1
Resolution Law Limited1
DWF Middle East Group LLP1
DWF (Nominees) 2013 Limited1
Harborne Road Nominees Limited1
DWF Connected Services Limited4
DWF Connected Services Group Limited3
Newco 4736 Limited4
Bailford Trustees Limited1
Bailford EBT Trustees Limited1
DWF Trustee (Scotland) Limited1
DWF Directors (Scotland) Limited1
DWF Secretarial Services (Scotland) Limited1
i
xxviii
UK
USA
Investment holding
Investment holding
i
i
i
ii
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
iii
iii
iii
iii
iii
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Investment holding
Legal services
Legal services
Legal services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Connected services
Non-trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Non-trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
Note 1
Note 2
Note 1
Note 2
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 1
Note 1
Note 2
Note 2
Note 2
Note 1
Note 1
Note 2
Note 2
Note 2
Note 2
Note 2
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
137
Registered address
Principal place
of business
Nature of business
Proportion
of ownership
iv
i
v
v
vi
vi
vii
viii
ix
ix
x
x
x
xxi
xxi
xxvi
xxvi
xxv
xxvi
xxvii
xxvi
xxvi
xxv
xi
xi
xii
xii
xiii
xiii
xiv
xv
xvi
xvii
xxii
xxiii
xxiv
xviii
i
xix
xx
UK
UK
UK
UK
France
France
Germany
Germany
Italy
Italy
ROI
ROI
ROI
Poland
Poland
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Australia
Australia
Australia
Australia
Canada
Canada
Singapore
Singapore
Hong Kong
UAE
USA
India
UK
USA
UK
UK
Guernsey
Dormant
Software provider
Trustees
Trustees
Legal services
Connected services
Investment holding
Legal services
Legal services
Connected services
Legal services
Connected services
Dormant
Investment holding
Legal services
Investment holding
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Connected services
Connected services
Connected services
Connected services
Connected services
Dormant
Dormant
Legal services
Legal services
Legal services
Legal services
Connected services
Connected services
Note 2
Note 1
Note 3
Note 3
Note 2
Note 1
Note 2
Note 2
Note 2
Note 1
Note 2
Note 1
Note 2
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
100%
100%
100%
Note 1
Note 2
Software provider
Asset investment
10%
<0.1%
Indirect continued
DWF Pension Trustees Limited
DWF 360 Limited
EBT
RST
DWF (France) AARPI2
DWF Claims (France) SAS
DWF Holding GbR
DWF Germany RmbH
DWF LLP Studio Legale Associato
DWF Claims (Italy) S.r.L.
DWF
DWF Claims (Ireland) Limited
DWF Dublin Secretarial Limited1
DWF Poland Holdings Sp. z o.o.
DWF Poland Jamka sp.k
DWF Spain S.L.P.4
Rousaud Costas Duran S.L.P.U.
Rousaud Costas Duran Abogados S.L.P.U.
Rousaud Costas Duran Concursal S.L.P.
Rousaud Costas Duran Valencia S.L.P.U.
RCD Tax & Legal Advisors S.L.P.U.
Gestart Assessors S.L.U.
Gestart Asesoramiento Empresarial S.L.U.
DWF Law Australia Pty Limited
DWF Australia Holdings Pty Ltd
DWF Claims (Australia) Pty Limited
DWF Adjusting (Australia) Pty Limited
DWF Claims (Canada) Limited
DWF Adjusting (Canada) Limited
DWF Compliance (Singapore) Pte Limited
Triton Global Claims (Asia) Pte Limited
Triton Global Claims (HK) Pty Limited
DWF (Middle East) LLP
Mindcrest Inc.2
Mindcrest (India) Private Limited
Mindcrest (UK) Limited2
DWF Claims (USA) LLC
Moat Pensions Limited
Other Investments
Dealscoper Limited
Mercantile Ports & Logistics Limited
1. Subsidiary undertakings have been excluded from the consolidation on the basis of immateriality.
2. The statutory year end in the period being reported is 31 December.
3. Entities have claimed audit exemption for the year to 30 April 2020 under Section 479A of the Companies Act 2006.
4. These entities were incorporated within financial year 2020.
Note 1 DWF Group plc indirectly controls these entities by virtue its designated membership of DWF Law LLP.
Note 2
DWF Group plc indirectly controls these entities by virtue of Governance Agreements and Intra-Group Agreements
between the Company, DWF Law LLP, DWF LLP and other related subsidiary undertakings.
Note 3 These trusts are consolidated as if they were subsidiaries of the Group.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
138
1 Scott Place, 2 Hardman Street, Manchester, United Kingdom, M3 3AA
42 Queen Street, Belfast, BT1 6HL
110 Queen Street, Glasgow, Scotland, G1 3HD
5 St. Paul’s Square, Old Hall Street, Liverpool, L3 9AE
13-14 Esplanade, St Heller, Jersey, JE1 1EE
137-139 rue de l’Université, 75007 Paris
14. Investments continued
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii) Habsburgerring 2, Westgate, 50674 Cologne, Germany
(viii) Prinzregentenstraße 78, Munich, DE-81675
Via del Bossi 6, Milano, Italy, 20121
(ix)
5 George’s Dock, IFSC, Dublin
(x)
(xi)
Level 6, 231 George Street, Brisbane, QLD 4000
(xii) 48 Hunter Street, Sydney
(xiii) 111 Queen Street East, Suite 450, Toronto, Ontario, M5C 1S2
(xiv) 9 Raffles Place, #58-0 Republic Plaza, Singapore, 048619
(xv) 8 Cross Street, #24-03/04 Manulife Tower, Singapore, 048424
(xvi) Suite 1101-1103, 11/F The Hong Kong Club Building, 3a Charter Road Central, Hong Kong
(xvii) P.O. Box 507104, Office 901 & 904, Tower 2, Al Fattan Currency House, DIFC, Dubai
(xviii) 740 Waukegan Road, Deerfield, Chicago, Illinois, 60015
(xix) Harrow House, 23 West Street, Haslemere, Surrey, GU27 2AB
(xx) Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3HB
(xxi) plac Stanisława Małachowskiego 2, 00-066 Warsaw
(xxii) 425 S. Financial Place, Suite 1100, Chicago, IL 60605
(xxiii) 603/604 Block D, Weikfield IT-Citi Info Park, Nagar Rd, Vadgaon Sheri, Pune, 411014
(xxiv) 1 Scott Place, 2 Hardman Street, Manchester, United Kingdom, M3 3AA
(xxv) Calle Serrano, 116, 28006 Madrid
(xxvi) Calle Escoles Pies, 102, 08017 Barcelona
(xxvii) Moratín 17, 46002 Valencia
(xxviii) 251 Little Falls Drive, Wilmington, Delaware 19808
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 15. Trade and other receivables
Trade receivables (net of allowance for doubtful receivables)
Other receivables
Amounts recoverable from clients in respect of unbilled revenue
Unbilled disbursements
Prepayments and accrued income
Reimbursement asset*
Non-current
Other receivables
Prepayments and accrued income
139
2019
£’000
86,022
5,108
53,996
6,279
11,911
852
164,168
152
–
152
2020
£’000
108,727
4,950
64,379
8,501
20,298
852
207,707
152
11,177
11,329
* Reimbursement asset attributable to FOIL provision, see note 20.
Trade receivables disclosed above include amounts which are past due at the reporting date but against which the Group has not
recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts
are still considered recoverable.
Non-current prepayments and accrued income relates to the prepaid remuneration expense arising as a result of the acquisitions
of Spain (£10,752,000) and Mindcrest (£425,000).
Ageing of trade receivables
Trade receivables not past due
Trade receivables past due
0 – 90 days
91 – 180 days
181 – 270 days
271 – 365 days
More than 365 days
2020
£’000
39,820
46,810
13,403
5,935
2,992
11,638
120,598
Lifetime expected credit losses are used to measure the loss allowance. These balances are held against trade receivables.
Movement in allowance for doubtful receivables
Brought forward provision
Impact of transition to IFRS 9
Provision utilised and other movements
Charges to income statement
2020
£’000
6,534
–
956
4,381
11,871
2019
£’000
33,656
37,368
7,548
4,820
2,172
6,992
92,556
2019
£’000
3,854
2,510
(2,206)
2,376
6,534
These balances are held against trade receivables. Charges to the income statement include £1,086,000 (2019: £nil) relating to
discontinued operations.
16. Cash and cash equivalents
Cash at bank and in hand
Bank overdrafts
Cash and cash equivalents per statement of cash flows
2020
£’000
31,212
(2,485)
28,727
2019
£’000
12,912
(2,090)
10,822
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
140
17. Trade and other payables
Trade payables
Other payables
Other taxation and social security
Accruals and deferred income
Operating lease incentives
Non-current
Operating lease incentives
2020
£’000
26,779
15,133
26,224
11,697
–
79,833
–
–
2019
£’000
24,756
7,657
9,879
10,291
1,412
53,995
10,072
10,072
The Group has given a guarantee in favour of its Australian bank of AUD 400,000 (2019: nil). Through that same bank, the Group has
issued rental guarantees to its landlords of AUD 2,971,820 (2019: AUD 2,971,820).
The Group has a rental guarantee in favour of a German landlord for €145,000 and in the favour of its Polish landlord for €245,000.
18. Lease liabilities
1 May 2019
Additions
Interest expense related to lease liabilities
Net foreign currency translation gain
Repayment of lease liabilities (including interest)
30 April 2020
Current lease liabilities
Non-current lease liabilities
The maturity of lease liabilities at 30 April 2020 were as follows:
Year to 2021
Year to 2022
Year to 2023
Year to 2024
Later years
Effect of discounting
Effect of movement in foreign currency translation rates
Lease liability at 30 April 2020
£’000
(87,302)
(9,832)
(2,047)
(198)
14,701
(84,678)
(12,981)
(71,697)
(84,678)
Lease
payments
£’000
(14,842)
(13,753)
(13,004)
(11,286)
(39,702)
7,930
(21)
(84,678)
The undiscounted contractual cash flows relating to lease liabilities accounted for in accordance with IFRS 16 is £92,608,000.
Further information regarding leases is set out in note 1.21.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
141
19. Other interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are
measured at amortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, refer
to note 21.
Obligations under interest-bearing loans and borrowings
Current liabilities
Bank loans
Supplier payment facility
Bank overdrafts
Non-current liabilities
Bank loans
Capitalised loan arrangement fees
Terms of repayment of bank loans and overdrafts
Within one year
Between one and five years
Total bank loans and overdrafts
Contractual terms of interest-bearing loans and borrowings
RCF
RCF
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
Unsecured bank loans
Supplier payment facility
Bank overdrafts
Nominal
interest rate
Currency
GBP
LIBOR+1.4%
EUR EURIBOR+1.4%
3.75%
GBP
2.00%
EUR
6.50%
AUD
1.77%-2.84%
GBP
1.50%
USD
No rate
GBP
Base+1.15%
GBP
Year of
maturity
2022
2022
2020
2020
2021
2019-2021
2020
2020
2020
2020
£’000
4,464
310
2,485
7,259
89,194
(379)
88,815
96,074
2020
£’000
7,259
88,815
96,074
2019
£’000
4,655
2,283
2,090
9,028
39,791
(595)
39,196
48,224
2019
£’000
9,028
39,196
48,224
Fair value
£’000
79,334
9,321
23
176
244
4,171
10
310
2,485
96,074
2020
Carrying
amount
£’000
79,334
9,321
23
176
244
4,171
10
310
2,485
96,074
Fair value
£’000
38,405
–
109
79
563
4,695
–
2,283
2,090
48,224
2019
Carrying amount
£’000
38,405
–
109
79
563
4,695
–
2,283
2,090
48,224
Note 1.3 sets out changes to the financial covenants attached to the RCF held with the Group’s banking syndicate.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
142
20. Provisions
Dilapidations provision
Dilapidation provisions are established for wear and tear of property leases, held at the date of the statement of financial position.
Such provisions are estimated at the start of the lease and updated annually. The Group’s current lease portfolio terminate over the
course of the next 10 years.
FOIL provision
The Forum of Insurance Lawyers (FOIL) provision represents the total VAT (partial exemption) exposure on historic claims handling
engagements. There is an attributable reimbursement asset in note 15, resulting in net exposure of £400,000 as at 30 April 2020
(2019: £400,000). The enquiry is ongoing and therefore it is not possible to estimate when the provision will crystallise.
Dilapidations provision
Balance at beginning of the year
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at the end of the year
Non-current
Current
FOIL provision
Balance at beginning of the year
Provisions reversed during the year
Balance at the end of the year
Non-current
Current
Total provisions
Balance at beginning of the year
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at the end of the year
Non-current
Current
2020
£’000
1,329
233
–
–
1,562
1,562
–
1,562
1,252
–
1,252
–
1,252
1,252
2,581
233
–
–
2,814
1,562
1,252
2,814
2019
£’000
119
1,440
(200)
(30)
1,329
1,329
–
1,329
1,252
–
1,252
–
1,252
1,252
1,371
1,440
(200)
(30)
2,581
1,329
1,252
2,581
21. Financial instruments
Financial risk management
The Directors have overall responsibility for the oversight of the Group’s risk management framework. Further explanation on
management of risk factors are provided in the risk section of the Strategic report.
The Group’s principal financial instruments comprise trade and other receivables, unbilled revenue, cash and cash equivalents,
trade and other payables, bank borrowings and capital contributions from partners.
Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables. Credit checks are performed for new clients and ongoing monitoring
takes place for existing clients.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group maintains
sufficient cash or working capital facilities to meet the cash requirements of the Group in order to mitigate this risk.
The Group is financed through a combination of partners’ capital (repayable on retirement of the Member), undistributed profits,
cash and bank borrowing facilities.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
143
The Group’s principal facility is a £80.0m revolving credit facility (‘RCF’). Details of amounts drawn can be found in note 19.
Management undertake rolling thirteen week cash flow forecasts to ensure visibility of short term liquidity and manage facility
usage, in addition to annual budgets and longer term forecasts. The RCF facility matures in 2022 and there are no contracted
repayments until that date. The Group anticipates continued utilisation of the facility to fund business growth.
Note 1.3 sets out changes to the financial covenants attached to the RCF held with the Group’s banking syndicate.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s
income. The Group’s exposure to market risk predominantly relates to interest and currency risk.
Interest rate risk
The Group’s bank borrowings incur both fixed and variable interest charges. The variable rates are linked to LIBOR plus a margin.
Foreign currency risk
The Group has overseas operations in Europe, Middle East, Asia, Australia, Canada and North America and is therefore exposed to
changes in the respective currencies in these territories. The Group maintains bank balances in local currency. Cash positions are
monitored and any imbalances are dealt with by purchasing currency at the spot rate.
Fair value measurement
The fair value of each class of financial assets and liabilities is the carrying amount, based on the following assumptions:
− Trade receivables, trade payables and short term borrowings – The fair value approximates to the carrying value because of the
short maturity of these instruments.
− Long term borrowings – The majority of the value of the Group’s borrowings are on a variable rate linked to LIBOR. Interest on
this is paid quarterly. Therefore the fair value of bank loans and other loans approximates to the carrying value reported in the
statement of financial position.
Cash and cash equivalents
Measured at amortised cost:
Trade and other receivables
Fair value through the profit or loss:
Investments
Total financial assets
Measured at amortised cost:
Trade and other payables
Lease liabilities
Borrowings
Amounts due to members of partnerships in the Group
Total financial liabilities
Notes
16
15
2020
£’000
28,727
2019
£’000
10,822
187,409
152,257
254
216,390
254
163,333
17
18
19
30
68,136
84,678
93,589
35,852
282,255
53,776
–
46,134
38,071
137,981
Financial instruments sensitivity analysis
The Group has exposure to interest rate and foreign exchange rate movements given the nature of its borrowings and operations.
At the end of the year, the effect of hypothetical changes in interest and currency rates are as follows.
Interest rate sensitivity
A change of 100 basis points in interest rates at the statement of financial position date would have increased/(decreased) equity
and income statement by the amounts shown below. This calculation assumes that the change occurred at the statement of
financial position date and had been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect
of financial instruments with variable interest rates, financial instruments at fair value through profit or loss or available for sale
with fixed interest rates and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for
comparative periods.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
144
21. Financial instruments continued
The impact of the results in the income statement and equity would be:
Impact on profit or loss
2020
£’000
(704)
2019
£’000
(501)
A decrease of 100 basis points in interest rates would have had the equal but opposite effect to the amounts shown above, on the
basis that all other variables remain constant. There would be negligible impact on gross assets.
Foreign exchange rate sensitivity
A 10% weakening of the following currencies against the pound sterling would have decreased equity and profit or loss by the
amounts shown below. This calculation assumes that the change occurred at the statement of financial position date and had been
applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same
basis for comparative periods.
The Group transacts in the following currencies which have been incorporated into the sensitivity analysis; Euro, US Dollar,
Australian Dollar, Singaporean Dollar, UAE Dirham, and Canadian Dollar.
The impact of the results in the income statement and statement of comprehensive income and equity would be:
Impact on equity
Impact on profit or loss
Impact on gross assets
Impact on gross liabilities
2020
£’000
(6)
(6,662)
(6,011)
6,004
2019
£’000
(1,316)
(1,001)
(3,078)
1,762
A 10% strengthening of the above currencies against the pound sterling would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables remain constant.
22. Deferred taxation
The deferred tax asset as at 30 April 2020 is as follows:
Assets
Balance at the beginning of year
Arising on group restructure
Acquired
Deferred tax debit recognised directly in equity
Deferred tax credit in the income statement for the year
Exchange rate translation
Balance at the end of year
2020
£’000
933
–
86
(198)
2,195
278
3,294
2019
£’000
–
636
–
–
297
–
933
£228,000 (2019: £nil) of the balance at the end of the year is classified as a current asset as it is expected to be utilised within
one year.
The Group deferred tax asset arises as a result of tax on share-based payments: £1.8m (2019: £0.2m), future deductions available on
property, plant and equipment £0.9m (2019: £0.6m) and future deductions available on tax losses carried forward £0.6m (2019: £nil).
It is anticipated that the Group and related subsidiary undertakings will make sufficient taxable profit to allow the benefit of the
deferred tax asset to be utilised. A potential deferred tax asset of £0.7m (2019: £0.6m) has not been recognised relating to tax losses.
The deferred tax liability as at 30 April 2020 is as follows:
Non-current liabilities
Balance at beginning of year
Arising on acquisition intangibles
Deferred tax credit in the income statement for the year
Balance at the end of year
2020
£’000
–
9,250
(366)
8,884
2019
£’000
–
–
–
–
The Group deferred tax liability relates to the recognition of acquired intangible assets arising on consolidation.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
23. Share capital
Number
of 1p each
Ordinary
shares
£’000
Share
premium
£’000
Treasury
shares
£’000
Issued and fully paid ordinary shares
On incorporation
Shares issued
At 30 April 2019
Shares issued in acquisition of Rousaud Costas Duran S.L.P.U
Shares issued in acquisition of Mindcrest Inc.
At 30 April 2020
1
299,999,999
300,000,000
19,525,927
5,028,726
324,554,653
–
3,000
3,000
195
51
3,246
–
63,167
63,167
19,037
6,406
88,610
–
–
–
(20)
–
(20)
145
Total
£’000
–
66,167
66,167
19,212
6,457
91,836
On 20 December 2019, DWF Group plc issued 17,559,755 ordinary shares with a nominal value of £0.01 each to Rousaud Costas
Duran SLP. On the same day the EBT agreed to subscribe for 1,966,172 newly issued shares to be held by the EBT for the benefit of
employees of Rousaud Costas Duran SLP only. One of the RCD Sellers (Carmaral 2000 SLP) who had received consideration shares
then agreed to transfer 1,145,755 of its shares to the EBT as a gift to be held by the EBT for the benefit of employees of Rousaud
Costas Duran SLP only. The total of shares that was issued altogether in relation to the acquisition of Rousaud Costas Duran SLP
is 19,525,927.
On 28 February 2020, DWF Group plc issued 5,028,726 ordinary shares with a nominal value of £0.01 each in relation to the
acquisition of Mindcrest Inc.
24. Reserves
The following describes the nature and purpose of each reserve within equity:
Share premium
Treasury shares
Merger reserve
Share-based payments
reserve
Translation reserve
(Accumulated losses)/
retained earnings
The amount subscribed for share capital in excess of the nominal value.
The treasury shares reserve represents shares in DWF Group plc held by the Group's share trusts.
The trusts are consolidated in the Group's financial statements.
The difference between the nominal value of shares acquired by the Company in the share-for-share
exchange with the former DWF LLP members and the nominal value of shares issued to acquire them.
The cumulative share-based payment expense net of release of amounts in respect of option exercised.
Gains/losses in translating the net assets of overseas operations into GBP.
All other net gains and losses and transactions with owners not recognised elsewhere.
25. Share-based payments
Charge to the income statement
The Group operates two share-based payment plans, both of which are equity settled.
The charge to the income statement is set out below:
Share plans:
Equity incentive plan (EIP)
Buy-as-you-earn plan (BAYE)
Social security expenses
Total expense
2020
£’000
5,503
6,096
11,599
971
12,570
2019
£’000
193
860
1,053
149
1,202
Details of Directors’ share awards are set out in the Directors’ Remuneration Report. In addition to Directors, some of the senior
management team received EIP share awards.
Within each plan, grants are made to eligible employees through one of several schemes as described below.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
146
25. Share-based payments continued
Share awards under the DWF Group plc 2020 EIP – IPO award
At IPO, awards were granted consisting of conditional and restricted share awards made to a limited number of the senior
management team.
Movements in the number of shares outstanding and their exercise prices are set out below:
Financial year
of grant
2018/19
2018/19
2018/19
2018/19
2018/19
Share
price per
award
1.25
1.25
1.25
1.25
1.25
Exercise
price per
award
Nil
Nil
Nil
Nil
Nil
Date of vesting
July 2020
July 2021
July 2022
July 2023
July 2024
Number of
shares for
which awards
outstanding
1 May
2019
671,316
671,316
671,316
671,316
671,316
Awards
granted
during the
year
–
–
–
–
–
Awards
vested
during the
year
–
–
–
–
–
Number of
shares for
which awards
outstanding
30 April
2020
671,316
671,316
671,316
671,316
671,316
Awards
lapsed
during the
year
–
–
–
–
–
The weighted average fair value of these awards granted during the period was £1.25 per award.
The EIP IPO awards were valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 14.2 (average volatility across the tranches granted)
− Expected life (years) 3.3 (average life across the tranches granted)
− Expected dividend yield (%) Nil
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as there
was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is an
entitlement to receive dividends or dividend equivalents. Management estimate that 100% of the shares will vest.
Share awards under the DWF Group PLC EIP – Career level 1-3 award
This scheme is to incentivise senior employees for performance and additional contribution to the Group. Additionally, as part of the
RCD acquisition, shares are ringfenced for future grant to employees of the acquired business which fall under this award.
In August 2019, awards were granted to incentivise senior employees and, in both January 2020 and April 2020, awards were
granted to incentivise RCD employees.
Share
price per
award
1.19
1.19
1.19
1.19
1.19
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
Exercise
price per
award
Date of vesting
Nil
January 2021
Nil
January 2022
Nil
January 2023
Nil
January 2024
January 2025
Nil
Nil September 2020
July 2021
Nil
July 2022
Nil
July 2023
Nil
July 2024
Nil
Nil
July 2025
Nil September 2020
July 2021
Nil
July 2022
Nil
July 2023
Nil
July 2024
Nil
July 2025
Nil
Number of
shares for
which awards
outstanding
1 May
2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Awards
granted
during the
year
104,190
104,190
104,190
104,190
104,190
150,011
449,807
449,807
449,807
449,807
299,797
42,655
127,900
127,900
127,900
127,900
85,245
Awards
vested
during the
year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number of
shares for
which awards
outstanding
30 April
2020
104,190
104,190
104,190
104,190
104,190
150,011
449,807
449,807
449,807
449,807
299,797
42,655
127,900
127,900
127,900
127,900
85,245
Awards
lapsed
during the
year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Financial year
of grant
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
The weighted average fair value of these awards granted during the period was £1.24 per award.
Career level 1-3 award awards are valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 14.5 (average volatility across the tranches granted)
− Expected life (years) 3.0 (average life across the tranches granted)
− Expected dividend yield (%) Nil
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 147
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as there
was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is an
entitlement to receive dividends or dividend equivalents on some of the awards. Management estimate that 80-100% of
performance conditions are met and there is between 5-25% attrition over the vesting period.
Share awards under the DWF Group PLC EIP – Long-Term Incentive Plan (‘LTIP’)
The Group incentivises its Executive Board with long-term reward based on challenging performance targets. Awards were granted
to the Executive Board members in the year.
Financial year
of grant
2019/20
2019/20
2019/20
2019/20
2019/20
Share
price per
award
1.19
1.19
1.19
1.19
1.19
Exercise
price per
award
Nil
Nil
Nil
Nil
Nil
Date of vesting
July 2020
July 2021
July 2022
July 2023
July 2024
The weighted average fair value of these awards was £1.19.
Number of
shares for
which awards
outstanding
1 May
2019
–
–
–
–
–
Awards
granted
during the
year
517,699
517,699
517,699
517,699
517,699
Awards
vested
during the
year
–
–
–
–
–
Number of
shares for
which awards
outstanding
30 April
2020
517,699
517,699
517,699
517,699
517,699
Awards
lapsed
during the
year
–
–
–
–
–
The LTIP free share awards are valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 12.8 (average volatility across the tranches granted)
− Expected life (years) 3.0 (average life across the tranches granted)
− Expected dividend yield (%) 5.0
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as there
was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is no
entitlement to receive dividends or dividend equivalents on the awards. Management estimate that 80% of performance conditions
are met and there is between 25% attrition over the vesting period.
Share awards under the DWF Group PLC EIP – Promotion award
The Group may incentivise its employees on promotion with a share award from this scheme.
Share
price per
award
1.24
1.24
1.24
1.24
1.24
1.19
1.19
1.19
1.19
1.19
Exercise
price per
award
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Date of vesting
January 2021
January 2022
January 2023
January 2024
January 2025
August 2020
August 2021
August 2022
August 2023
August 2024
Number of
shares for
which awards
outstanding
1 May
2019
–
–
–
–
–
–
–
–
–
–
Awards
granted
during the
year
87,243
87,243
87,243
87,243
87,243
61,742
61,742
61,742
61,742
61,742
Awards
vested
during the
year
–
–
–
–
–
–
–
–
–
–
Number of
shares for
which awards
outstanding
30 April
2020
87,243
87,243
87,243
87,243
87,243
61,742
61,742
61,742
61,742
61,742
Awards
lapsed
during the
year
–
–
–
–
–
–
–
–
–
–
Financial year
of grant
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
2019/20
The weighted average fair value of these awards was £1.19.
The promotion share awards are valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 13.0 (average volatility across the tranches granted)
− Expected life (years) 3.0 (average life across the tranches granted)
− Expected dividend yield (%) 5.0
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as there
was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is no
entitlement to receive dividends or dividend equivalents on the awards. Management estimate that 80% of performance conditions
are met and there is 25% attrition over the vesting period.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 148
25. Share-based payments continued
Share awards under the DWF Group plc BAYE – IPO award
At IPO, awards were granted to eligible employees.
Financial year
of grant
2018/19
2018/19
2019/20
2019/20
Share
price per
award
1.25
1.25
1.19
1.19
Exercise
price per
award
Nil
Nil
Nil
Nil
Date of vesting
July 2020
July 2021
August 2021
August 2022
The weighted average fair value of these awards was £1.25.
Number of
shares for
which awards
outstanding
1 May
2019
5,554,568
5,554,568
–
–
Awards
granted
during the
year
–
–
312,675
312,675
Awards
vested
during the
year
–
–
–
–
Number of
shares for
which awards
outstanding
30 April
2020
5,554,568
5,554,568
312,675
312,675
Awards
lapsed
during the
year
–
–
–
–
The BAYE IPO awards are valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 15.0 (average volatility across the tranches granted)
− Expected life (years) 1.5 (average life across the tranches granted)
− Expected dividend yield (%) 5.0
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as there
was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is no
entitlement to receive dividends or dividend equivalents on the awards. Management estimate there is 25% attrition over the
vesting period.
Share awards under the DWF Group plc BAYE – free-share award
The Group incentivises its employees for additional contributions from this scheme.
Financial year
of grant
2019/20
2019/20
Share
price per
award
1.24
1.24
Exercise
price per
award
Nil
Nil
Date of vesting
December 2021
December 2022
Number of
shares for
which awards
outstanding
1 May
2019
–
–
Awards
granted
during the
year
97,301
97,301
Awards
vested
during the
year
–
–
Awards
lapsed
during the
year
–
–
Number of
shares for
which awards
outstanding
30 April
2020
97,301
97,301
The weighted average fair value of these awards granted during the period was £1.24 per award.
The BAYE free-share awards were valued using the Black Scholes method with the following assumptions:
− Expected volatility (%) 21.0 (average volatility across the tranches granted)
− Expected life (years) 1.0 (average life across the tranches granted)
− Expected dividend yield (%) Nil
Expected volatility was determined by reference to the historical volatility of the FTSE All Share Support Services Index, as
there was insufficient trading history in the Groups’ shares. The expected life used is the vesting date of the award. There is
no entitlement to receive dividends or dividend equivalents. Management estimate that 100% of the shares will vest.
26. Related parties and ultimate controlling party
The Directors are not aware of any related party transactions other than those disclosed in this paragraph.
As a member of the Executive Board, Jason Ford is a related party of the Company. In July 2017, July 2018 and July 2019 loan
agreements (the ‘July 2017 Loan Agreement’, the ‘July 2018 Loan Agreement’ and the ‘July 2019 Loan Agreement respectively)
were executed between DWF LLP and six former directors of Triton Global Limited, including Jason Ford (who at the time of the
agreements was a member of DWF LLP) (together, the ‘Borrowers’). As at 30 April 2020, the total aggregate outstanding loan
amount owed by the Borrowers to DWF LLP under these agreements was £691,602 (2019: £398,051). The Borrowers are jointly
and severally liable under those loan agreements.
In March 2017, DWF LLP and Jason Ford entered into a loan agreement, pursuant to which DWF LLP provided a loan of £100,000 to
Jason Ford for the purpose of repayment by Jason Ford of a professional corporate investment loan made available by Barclays Bank
plc to Jason Ford in December 2015 to fund a shareholder loan to Triton Global Limited. The outstanding loan amount owed by Jason
Ford to DWF LLP as at 30 April 2020 was £100,000 (2019: £100,000).
In the opinion of the Directors, there is no controlling party of DWF Group plc.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 27. Key management personnel
Compensation paid to key management personnel
Remuneration of the PLC Board
Short term employee benefits
Post-employment benefits
Share-based payments
149
2020
£’000
1,420
60
1,328
2,808
2019
£’000
175
7
–
182
Key management personnel comprise of the PLC Board of Directors.
28. Employee information and their pay and benefits
The average number of persons employed by the Group (including Executive Directors) during the year, analysed by category, and
the aggregate payroll costs of these persons were as follows:
Legal advisers
Support staff
Wages and salaries
Social security costs
Contributions to defined contribution plans
2020
No.
1,980
1,341
3,321
£’000
193,576
11,970
6,689
212,235
2019
No.
1,626
1,089
2,715
£’000
110,156
11,369
4,854
126,379
Defined contribution plans
The Group operates defined contribution pension plans. The amounts charged to the income statement in respect of the scheme
represents contributions payable in respect of the accounting period. The total annual pension cost for the defined contribution
scheme was £6,689,000 at 30 April 2020 (30 April 2019: £4,854,000) and the outstanding balance at year end was £979,000 at
30 April 2020 (30 April 2019: £914,000).
29. Cash generated from operations
a) Cash generated/(used) in operations before adjusting items
Cash flows from operating activities
Profit before tax including loss from discontinued operations
Adjustments for:
Impairment
Amortisation of acquired intangible assets
Depreciation of right-of-use asset
Other depreciation and amortisation
Gain on bargain purchase
Non-underlying items
Share-based payments expense
Interest payable on leases
Net finance expense
Operating cash flows before movements in working capital
Increase in trade and other receivables
Increase in trade and other payables
Increase in provisions
Decrease in amounts due to members of partnerships in the Group
Cash generated/(used) in operations before adjusting items
2020
£’000
2019
£’000
13,897
12,322
1,036
1,510
11,580
6,175
(25,084)
7,632
11,599
2,047
1,905
32,297
(18,726)
15,125
233
(4,771)
24,158
–
–
–
5,365
–
12,569
1,202
–
2,131
33,589
(24,601)
1,455
1,210
(22,198)
(10,545)
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
150
29. Cash generated from operations continued
Analysis of cash and cash equivalents and other interest bearing loans and borrowings:
Cash and cash equivalents
Bank loans
Supplier payments facility
Total net debt (excluding IFRS 16)
1 May
2019
£’000
10,822
(43,851)
(2,283)
(35,312)
Cash flow
£’000
17,943
(48,622)
1,973
(28,706)
Exchange
movement
£’000
(38)
–
–
(38)
Non-cash
movement
£’000
–
(806)
–
(806)
30 April
2020
£’000
28,727
(93,279)
(310)
(64,862)
Following the impact of the current year transition to IFRS 16 Leases (from IAS 17 Leases – see note 1.21), net debt including lease
liabilities is £149,540,000.
Cash and cash equivalents
Bank loans
Supplier payments facility
Total net debt (excluding IFRS 16)
b) Free cash flows
1 May
2018
£’000
4,228
(53,394)
(4,930)
(54,096)
Cash flow
£’000
6,618
9,185
2,647
18,450
Exchange
movement
£’000
(24)
13
–
(11)
Non-cash
movement
£’000
–
345
–
345
30 April
2019
£’000
10,822
(43,851)
(2,283)
(35,312)
Free cash flows
Operating cash flows before movements in working capital
Net working capital movement
Amounts due to members of partnerships in the Group
Cash generated from/(used in) operations before adjusting items
Repayment of lease liabilities
Net interest paid
Tax paid
Purchase of property, plant and equipment
Purchase of other intangible assets
Free cash flows
c) Working capital measures
WIP days
Amounts recoverable from clients in respect of unbilled revenue
Unbilled disbursements
Total WIP
Pro-forma net revenue
WIP days
Debtor days
Trade receivables (net of allowance for doubtful receivables)
Other receivables
Total debtors
Pro-forma net revenue
Debtor days
Gross lock-up days
Total WIP
Total debtors
Total gross lock-up
Pro-forma net revenue
Gross lock-up days
Pro-forma net revenue includes revenue from acquisitions on a full year pro-forma basis.
2020
£’000
2019
£’000
32,297
(3,368)
(4,771)
24,158
(12,654)
11,504
(4,192)
(4,309)
(3,520)
(4,116)
(4,633)
33,589
(21,936)
(22,198)
(10,545)
–
(10,545)
(2,112)
(50)
(4,196)
(1,222)
(18,125)
2020
£’000
2019
£’000
64,379
8,501
72,880
330,340
81
108,727
4,950
113,677
330,340
125
72,880
113,677
186,557
330,340
206
53,996
6,279
60,275
272,361
81
86,022
5,108
91,130
272,361
122
60,275
91,130
151,405
272,361
203
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020
151
30. Amounts due to members of partnerships in the Group
Amounts due to members of partnerships in the Group comprise unallocated reserves within equity, members’ capital and other
amounts due to members classified as liabilities as follows:
At 1 May 2019
Members’ remuneration charged as an expense
Introduced by the Members
Repayments of capital
Drawings
At 30 April 2020
At 1 May 2018
Members’ remuneration charged as an expense
Allocation of retained profit
Introduced by the Members
Repayments of capital
Drawings
At 30 April 2019
Members’
capital
£’000
10,679
–
5,938
(3,386)
–
13,231
Other amounts
due to Members
£’000
27,392
38,808
–
–
(43,579)
22,621
Members’
capital
£’000
29,071
–
–
4,732
(23,124)
–
10,679
Other amounts
due to Members
£’000
6,644
31,014
42,537
–
–
(52,803)
27,392
Total amounts
due to Members
of partnerships
in the Group
£’000
38,071
38,808
5,938
(3,386)
(43,579)
35,852
Total amounts
due to Members
of partnerships
in the Group
£’000
35,715
31,014
42,537
4,732
(23,124)
(52,803)
38,071
The average number of members during the year and members’ remuneration charged as an expense during the year was
as follows:
Average number of Members of partnerships held by the Group during the year
Members’ profit share charged as an expense
Pro-forma revised compensation model adjustment
Partner annual bonus charged as an expense
Revised compensation model adjustment
2020
366
£’000
38,808
(38,808)
–
–
–
2019
249
£’000
31,014
(36,970)
(5,956)
(500)
(6,456)
To allow for greater comparability of financial performance, a revised compensation model adjustment is calculated for each relevant
period on the same basis as is described in the IPO Prospectus. The adjustments reflect the impact of the revised compensation
model for Members of the Partnerships held by the Group as if the revised compensation model had been in place during the
pre-IPO period.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
152
31. Events after the reporting period
Directorate changes
On 29 May 2020, Andrew Leaitherland informed the Board of his intention to step down as Group Chief Executive Officer with
immediate effect. Sir Nigel Knowles assumed the role of Group Chief Executive Officer and Chris Sullivan, the Senior Independent
Director, was appointed as interim Chairman on the same day.
On the 31 July 2020, following the successful completion of a process led by the Nomination Committee to hire a new Chair, the
Company announced that Jonathan Bloomer would join the Board as Chairman with effect from 1 August 2020. On the same day,
Chris Sullivan was appointed as Deputy Chairman and continues to act as Senior Independent Director.
The Company intends to announce on 8 September 2020 the following appointments with effect from 22 October 2020:
− Matthew Doughty as Group Chief Operating Officer of DWF Group plc. Matthew Doughty will step down as Partner Director at
the same time; and
− Following a thorough internal recruitment process, Michele Cicchetti and Seema Bains as Partner Directors of DWF Group plc.
The position of Partner Director is designated by the Board as a Non-independent, Non-Executive Director position.
A Partner Director represents the partners of DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on
the Board.
Discontinuation and scale back programmes
In a trading statement on 9 July 2020, the Board announced further closures and scaling back programmes in Brussels, Singapore
and Dubai as well as for DWF Resource (a part of the Connected Services division). The results for these business are not treated as
discontinued in the period as the decision was taken after the year end. These operations represented c.1.5% of the Group’s
revenues and generated a £4.5m EBITDA loss in FY20.
Consolidated notes to the financial statements continuedDWF Group plcAnnual report and financial statements 2020 Company statement of financial position
As of 30 April 2020
Non-current assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash at bank and in hand
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Other interest-bearing loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Share-based payments reserve
Retained earnings
Total equity
153
Notes
2020
£’000
2019
£’000
2
3
4
5
6
6
235,605
235,605
156,201
123
156,324
391,929
9,338
9,338
79,334
79,334
88,672
303,257
3,246
88,610
9,672
201,729
303,257
227,428
227,428
100,243
3,115
103,358
330,786
735
735
38,405
38,405
39,140
291,646
3,000
63,167
1,053
224,426
291,646
Under section s408 of the Companies Act 2006 the Company is exempt from the requirement to present its own income
statement. The loss for the period to 30 April 2020 was £12,886,000 (2019: £3,324,000).
These financial statements of DWF Group plc (registered number: 11561594) were approved by the board on 7 September 2020.
Notes 1 to 10 are an integral part of these financial statements.
Sir Nigel Knowles
Group Chief Executive Officer
Chris Stefani
Chief Financial Officer
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
154
Company statement of changes in equity
Year ended 30 April 2020
Balance on incorporation
Loss for the period
Total comprehensive expense
Issue of share capital
Treasury share sale
Merger of existing group
Share-based payments
At 30 April 2019
1 May 2019
Loss for the year
Total comprehensive expense
Issue of share capital
Dividends paid
Share-based payments
At 30 April 2020
Share capital
£’000
–
–
–
3,000
–
–
–
3,000
Share premium
£’000
–
–
–
63,167
–
–
–
63,167
Share
capital
£’000
3,000
–
–
246
–
–
3,246
Share
premium
£’000
63,167
–
–
25,443
–
–
88,610
Share-based
payments
reserve
£’000
–
–
–
–
–
–
1,053
1,053
Share-based
payments
reserve
£’000
1,053
–
–
–
–
8,619
9,672
Retained
earnings
£’000
–
(3,324)
(3,324)
–
2,707
225,043
–
224,426
Retained
earnings
£’000
224,426
(12,886)
(12,886)
–
(9,811)
–
201,729
Total equity
£’000
–
(3,324)
(3,324)
66,167
2,707
225,043
1,053
291,646
Total equity
£’000
291,646
(12,886)
(12,886)
25,689
(9,811)
8,619
303,257
Notes 1 to 10 are an integral part of these financial statements.
DWF Group plcAnnual report and financial statements 2020
155
Company notes to the financial statements
Year ended 30 April 2020
1. Accounting policies
General information and basis of accounting
DWF Group plc (the ‘Company’), is a public limited company incorporated on 10 September 2018, domiciled in the United Kingdom
under the Companies Act 2006, and registered in England. The registered office is 20 Fenchurch Street, London, EC3M 3AG.
The Company meets the definition of a qualifying entity under FRS 100 ‘Application of Financial Reporting Requirements’ issued by
the FRC. Accordingly, these financial statements were prepared in accordance with Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (‘FRS 101’). In preparing these financial statements, the Company applies the recognition, measurement and
disclosure requirements of International Financial Reporting Standards as adopted by the EU (‘IFRS’), but makes amendments
where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101
disclosure exemptions has been taken.
The functional currency of the Company is pounds sterling because that is the currency of the primary economic environment in
which the Company operates. The Company financial statements are presented in pounds sterling. Foreign operations are included
in accordance with the policies set out below.
The Company financial statements have been prepared in accordance with Financial Reporting Standard 101 ‘The Financial
Reporting Standard applicable in the UK and Republic of Ireland’ (‘FRS 101’). In these financial statements, DWF Group plc has
applied the exemptions available under FRS 101 in respect of the following disclosures:
− Cash Flow Statement and related notes;
− Comparative period reconciliations for tangible fixed assets, intangible assets, investment, and members’ interest;
− Disclosures in respect of transactions with wholly owned subsidiaries;
− Disclosures in respect of capital management;
− The effects of new but not yet effective IFRSs;
− An additional statement of financial position for the beginning of the earliest comparative period following the retrospective
change in accounting policy, the correction of error, or the reclassification of items in the financial statements;
− Disclosures in respect of the compensation of key management personnel; and
− Disclosures of transactions with a management entity that provides key management personnel services to the Company.
As the consolidated financial statements of the Group include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of the following disclosures:
− Certain disclosures required by IAS 36: Impairment of assets in respect of the impairment of goodwill and indefinite life
intangible assets;
− Certain disclosures required by IFRS 3: Business combinations in respect of business combinations undertaken by the
Company; and
− Certain disclosures required by IFRS 13: Fair Value Measurement and the disclosures required by IFRS 7 Financial
Instrument Disclosures.
As the consolidated financial statements of the Group include the equivalent disclosures, DWF Group plc has also taken the
exemptions under section 408(4) of the Companies Act 2006, not to present its individual income statement and related notes as
part of these financial statements.
The accounting policy set out below has, unless otherwise stated, been applied consistently to all periods presented in the
Company financial statements. The accounting policies in note 1 of the consolidated notes to the financial statements of DWF
Group plc also apply to the parent company.
1.1 Investments in subsidiaries
Investments in subsidiaries are stated at cost less provision for any impairment in value.
2. Investment
Investments
At the start of the year
Additions
At the end of the year
2020
£’000
2019
£’000
227,428
8,177
235,605
–
227,428
227,428
Additions in the year ended 30 April 2020 relates to the incorporation of the Group’s US holding company DWF Group (US) LLC and
the related acquisition of Mindcrest Inc together with, inter alia, the push down of the share-based payment expense to entity’s that
the employees provide services to.
On 11 March 2019 DWF Group plc issued ordinary shares in a share-for-share exchange with the shareholders of DWF Holdings
Limited. Consequently, DWF Group plc directly owns 100% of DWF Holdings Limited. See note 6 for more information.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information
2020
£’000
156,188
13
156,201
2019
£’000
100,243
–
100,243
2020
£’000
520
3
1,386
2,189
5,240
9,338
2019
£’000
–
63
149
523
–
735
Total
£’000
–
66,167
66,167
19,232
6,457
91,856
156
Company notes to the financial statements continued
3. Trade and other receivables
Amounts due from subsidiary undertakings*
Prepayments and accrued income
* Amounts due from all subsidiaries are interest free, unsecured and repayable on demand.
4. Trade and other payables
Trade payables
Other payables
Other taxation and social security
Accruals
Amounts due to subsidiary undertakings*
* Amounts due to subsidiary undertakings are interest free and repayable on demand.
5. Other interest bearing loans and borrowings
Further details on the Company’s RCF can be found on the consolidated financial statements note 21.
6. Share capital
Issued and fully paid ordinary shares
On incorporation
Shares issued
At 30 April 2019
Shares issued in acquisition of Rousaud Costas Duran S.L.P.U
Shares issued in acquisition of Mindcrest Inc.
At 30 April 2020
Number
of 1p each
Ordinary
shares
£’000
Share
premium
£’000
1
299,999,999
300,000,000
19,525,927
5,028,726
324,554,653
–
3,000
3,000
195
51
3,246
–
63,167
63,167
19,037
6,406
88,610
7. Employee information and Directors’ remuneration
The Company had no employees (other than Directors) employed during the year. No Directors received remuneration in respect to
services to the Company in the year (2019: £nil).
8. Related parties
The Company has taken the advantage of the exemption to not disclose the transactions between the wholly owned or controlled
Group companies.
9. Ultimate parent company and parent company of Group
In the opinion of the Directors, there is no controlling party of DWF Group plc.
10. Events after the reporting period
Directorate changes
On 29 May 2020, Andrew Leaitherland informed the Board of his intention to step down as Group Chief Executive Officer with
immediate effect. Sir Nigel Knowles assumed the role of Group Chief Executive Officer and Chris Sullivan, the Senior Independent
Director, was appointed as interim Chairman on the same day.
On the 31 July 2020, following the successful completion of a process led by the Nomination Committee to hire a new Chair, the
Company announced that Jonathan Bloomer would join the Board as Chairman with effect from 1 August 2020. On the same day,
Chris Sullivan was appointed as Deputy Chairman and continues to act as Senior Independent Director.
The Company intends to announce on 8 September 2020 the following appointments with effect from 22 October 2020:
− Matthew Doughty as Group Chief Operating Officer of DWF Group plc. Matthew Doughty will step down as Partner Director at
the same time; and
− Following a thorough internal recruitment process, Michele Cicchetti and Seema Bains as Partner Directors of DWF Group plc.
The position of Partner Director is designated by the Board as a Non-independent, Non-Executive Director position.
A Partner Director represents the partners of DWF Law LLP and DWF LLP and is therefore a partner shareholder representative on
the Board.
DWF Group plcAnnual report and financial statements 2020
Shareholder information
2020 Financial Calendar
24 September 2020 Ex dividend date for the final dividend
25 September 2020 Record date to be eligible for the final
dividend
21 October 2020
Annual General Meeting
5 November 2020
Payment date for the final dividend
December 2020
Announcement of interim results
Shareholder enquiries
The Company’s share register is maintained by Equiniti.
Shareholders with queries relating to their shareholding should
contact Equiniti as follows.
By post:
Equiniti Limited, Aspect House, Spencer Road, Lancing,
West Sussex, BN99 6DA
UK Telephone:*
0371 384 2030
Online:
Overseas telephone:
+44 (0)121 415 7047
help.shareview.co.uk
(from here you can email Equiniti securely with your enquiry)
*Lines are open from 9.00am to 5.00pm UK time, Monday to Friday.
Direct credit of dividend payment
Dividends can be paid automatically into your bank or building
society account.
The benefits of doing this are that you will:
− receive cleared funds in your bank account on the
payment date
− avoid postal delays
− remove the risk of your cheques getting lost in the post.
To take advantage of this service or for further details, contact
Equiniti or visit shareview.co.uk
For overseas shareholders, a separate dividend service provided
by Equiniti enables those living overseas to have their dividend
paid into their bank account, for a small fee. For further details
please contact Equiniti or visit shareview.co.uk
157
Annual General Meeting (‘AGM’)
The AGM of the Company will be held at 2.00pm on 21 October
2020 to be held at and broadcast live from the office of the
Company at 20 Fenchurch Street, London, United Kingdom,
EC3M 3AG
The Notice of AGM and a proxy form accompanies this Annual
Report. You can also find the Notice of AGM on the Company’s
website dwfgroup.com/en/investors
Electronic communications
Shareholders can sign up for electronic communications online
by registering with Shareview, the internet-based platform
provided by our Registrars, Equiniti. In addition to enabling
shareholders to receive communications by email, Shareview
provides a facility for shareholders to manage their shareholding
online by allowing them to:
− receive trading updates by email
− view their shareholdings
− update their records – including change of address
− vote in advance of company general meetings. To find out
more about the services offered by Shareview please visit
shareview.co.uk
Corporate website
Shareholders are encouraged to visit our website dwfgroup.
com/en/investors which provides:
− Company news and information
− our model of Complex, Connected and Managed Services
− the Company’s approach to operating responsibly.
There is also a specific investors’ section which contains
up-to-date information for shareholders, including:
− comprehensive share price information
− financial results
− access to current and historical shareholder documents,
such as this Annual Report.
Unsolicited telephone calls and correspondence
Shareholders should be wary of any unsolicited advice, offers
to buy shares at a discount, or offers of free reports about the
Company. These are typically from overseas ‘brokers’ who target
UK or US shareholders, offering to sell them what often turns
out to be worthless or high-risk shares. These operations are
commonly known as boiler rooms, and the brokers can be very
persistent and extremely persuasive.
Shareholders are advised to deal only with financial services firms
that are authorised by the Financial Conduct Authority (‘FCA’).
You can check if a firm is properly authorised by the FCA by
visiting fca.org.uk/register. If you do deal with an unauthorised
firm, you will not be eligible to receive payment under the
Financial Services Compensation Scheme if anything goes wrong.
For more detailed information on how you can protect yourself
from an investment scam, or to report a scam, go to fca.org.uk/
consumers/scams/report-scam-us or call 0800 111 6768.
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 158
Corporate information
Company name
DWF Group plc
Registered number
England 11561594
Secretary and registered office
Mollie Stoker
DWF Group plc
20 Fenchurch Street
London
EC3M 3AG
United Kingdom
companysecretary@dwf.law
dwfgroup.com
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
BN99 6DA
United Kingdom
UK Telephone:* 0371 384 2030
Overseas telephone: +44 (0)121 415 7047
* Lines are open from 9.00am to 5.00pm UK time,
Monday to Friday.
Statutory Auditor
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
United Kingdom
Corporate stockbrokers
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
United Kingdom
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
United Kingdom
Zeus Capital Limited
82 King Street
Manchester
M2 4WQ
United Kingdom
Principal UK bankers
HSBC UK Bank plc
8 Canada Square
London
E14 5HQ
United Kingdom
DWF Group plcAnnual report and financial statements 2020 Principal offices
United Kingdom
42 Queen Street
Belfast
BT1 6HL
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GA
Redcliff Quay
120 Redcliff Street
Bristol
BS1 6HU
No. 2 Lochrin Square
96 Fountainbridge
Edinburgh
EH3 9QA
110 Queen Street
Glasgow
G1 3HD
Bridgewater Place
Water Lane
Leeds
LS11 5DY
5 St Paul’s Square
Old Hall Street
Liverpool
L3 9AE
20 Fenchurch Street
London
EC3M 3AG
1 Scott Place
2 Hardman Street
Manchester
M3 3AA
2nd Floor Central Square South
Orchard Street
Newcastle upon Tyne
NE1 3AZ
Argentina
DWF in association with
VAGEDES & Asociados
Av. Córdoba 487
Piso 6 K
C1054AAD Buenos Aires
Argentina
Australia
DWF
Level 36
Riverside Centre
123 Eagle Street
Brisbane QLD 4000
GPO Box 74
Brisbane QLD 4001
DWF
Level 43
600 Bourke Street
Melbourne VIC 3000
PO Box 13221 Law Courts
VIC 8010
DWF Adjusting
Suite 114
Level 1
486 Lower Heidelberg Road
Lower Heidelberg
Melbourne
VIC 3084
DWF
Suite 2
Level 6
18 Honeysuckle Drive
Newcastle NSW 2300
PO Box 2277
Dangar NSW 2309
DWF
Level 18
363 George Street
Sydney NSW 2000
GPO Box 260
Sydney NSW 2001
DWF Adjusting
Suite 1
Level 1
123 Midson Road
Epping NSW 2121
Belgium
*office closing in early 2021
Avenue Louise 523
B-1050 Brussels
Belgium
Canada
111 Queen Street East
Suite 450
Toronto
ON
M5C 1S2
France
137-139 rue de l’Université
75007 Paris
France
Toque K0165
159
Germany
Rechtsanwaltsgesellschaft mbH
Linkstr. 12
10785 Berlin
Germany
Rechtsanwaltsgesellschaft mbH
Habsburgerring 2
Westgate
50674 Cologne
Germany
Rechtsanwaltsgesellschaft mbH
Königsallee 60 c
D-40212 Düsseldorf
Germany
Rechtsanwaltsgesellschaft mbH
Prinzregentenstraße 78
81675 Munich
Germany
India
DWF Mindcrest
603/604 Block D
Weikfield IT-Citi Info Park
Nagar Rd, Vadgaonsheri
Pune 411 014
India
Ireland
5 George’s Dock
IFSC
Dublin
Italy
Via dei Bossi 6
20121
Milano
Panama
DWF in association with
Fabrega Molino
BMW Plaza
9th Floor
50 St
P.O. Box 0816-00744
Panama
Rep. of Panama
Poland
plac Stanisława Małachowskiego 2
00-066 Warszawa
Poland
Qatar
Office 01D04
Mezzanine Floor
Tornado Tower
PO Box 9417
Doha
Singapore
*office closing in early 2021
9 Raffles Place
Level 58 Republic Plaza
Singapore 048619
DWF Group plcAnnual report and financial statements 2020Strategic reportGovernanceFinancial statementsOther information 160
Principal offices continued
Spain
Escoles Pies 102
08017 Barcelona
Serrano 116
28006 Madrid
Moratín 17
46002 Valencia
Turkey OGB
(Özkan Gürden Bingöl Attorney
Partnership, Istanbul), in association
with DWF
Spring Giz Plaza Meydan Sok.
No: 31
Maslak 34398
Istanbul
United Arab Emirates
Offices 901 & 904 Tower 2
Al Fattan Currency House DIFC
PO Box 507104
Dubai
United States of America
DWF in association with WSHB
1230 Peachtree Street
NE Suite 925
Atlanta
GA 30309
DWF
740 Waukegan Road Suite
340 Deerfield
IL 60015
DWF in association with WSHB
222 South Riverside Plaza Suite
640 Chicago
IL 60606
DWF Mindcrest
425 S. Financial Place
Suite 1100
Chicago
IL, 60605
DWF in association with WSHB
40 Richards Avenue
3rd Floor
Norwalk
CT 06854
DWF in association with WSHB
901 Main Street
Suite 3670
Dallas
TX 75202
DWF in association with WSHB
1805 Shea Center Drive
Suite 200
Highlands Ranch
CO 80129
DWF in association with WSHB
7112 North Fresno Street
Suite 160
Fresno
CA 93720
DWF in association with WSHB
505 North Brand Boulevard
Suite 1100
Glendale
CA 91203
DWF in association with WSHB
2881 Business Park Court
Suite 200
Las Vegas
NV 89128
DWF in association with WSHB
10960 Wilshire Boulevard
18th Floor
Los Angeles
CA 90024
DWF in association with WSHB
701 Brickell Avenue
Suite 1640
Miami
FL 33131400
DWF in association with WSHB
400 Connell Drive
Suite 1100
Berkeley Heights
NJ 07922
DWF Mindcrest
c/o Regus
104 West 40th Street
Suites 400 and 500
New York, 10018
DWF in association with WSHB
685 Third Avenue
18th Floor
New York
NY 10017
DWF in association with WSHB
1401 Willow Pass Road
Suite 700
Concord
CA 94520
DWF in association with WSHB
6A Liberty Street
Suite 200
Aliso Viejo
CA 92656
DWF in association with WSHB
1760 Market Street
Suite 1001
Philadelphia
PA 19103
DWF in association with WSHB
2525 E. Camelback Road
Suite 450
Phoenix
AZ 85016
DWF in association with WSHB
12755 SW 69th Avenue
Suite 100
Portland
OR 97223
DWF in association with WSHB
9333 Fairway View Place
Suite 200
Rancho Cucamonga
CA 91730
DWF in association with WSHB
21804 Cactus Avenue
Suite 200
Riverside
CA 92518
DWF in association with WSHB
501 West Broadway
Suite 1200
San Diego
CA 92101
DWF in association with WSHB
520 Pike Street
Suite 1525
Seattle
WA 98101
DWF in association with WSHB
1501 S. Church Avenue
Suite 200
Tampa
FL 33629
DWF in association with WSHB
199 West Hillcrest Drive
Suite 204
Thousand Oaks
CA 91360
DWF Group plcAnnual report and financial statements 2020 This Report is printed on
materials which are FSC®
certified from well
managed forests.
These materials contain ECF
(Elemental Chlorine Free) pulp
and are 100% recyclable.
DWF Group plcAnnual report and financial statements 2020 D
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DWF Group plc
20 Fenchurch Street
London EC3M 3AG
T +44 (0)333 320 2220
F +44 (0)333 320 4440
dwfgroup.com