REG - DSW Capital PLC - Half Year Results
25/11/2024 07:00
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RNS Number : 4092N DSW Capital PLC 25 November 2024
25 November 2024
HALF YEAR RESULTS
Resilient performance with momentum building in M&A, leading to guidance
upgrades
DSW Capital, a profitable, mid-market, challenger professional services
licence network and owner of the Dow Schofield Watts and DR Solicitors brands,
is pleased to announce its half year results for the six-month period ended 30
September 2024 ("H1 25" or the "Period"), which demonstrate the Group's
resilience and were in line with management expectations.
Post Period end and as announced in the Trading Update issued on 7 November,
the Group delivered an outstanding performance in October 2024, driven by
exceptionally strong levels of M&A activity and completions ahead of the
Autumn Budget on 30 October 2024. This outstanding performance, combined with
the transformational and earnings-enhancing acquisition of DR Solicitors
Limited, announced on 4 November 2024, led to the board updating its guidance
on the expected outcome for FY25.
The Group entered H2 25 in better shape than it has ever been, with a more
diversified and resilient business and significantly reduced dependency on
M&A activity. While always mindful of macro-economic and political
uncertainties, the board is confident in the Group's growth strategy and
continues to invest in the long-term future of the business.
Financial highlights
· Network Revenue was 6.8% higher at £7.8m (H1 24: £7.3m), as M&A activity
gradually improved across the Period and gained momentum in September 2024
· Total income from licensees was £1.1m (H1 24: £1.1m)
· Adjusted Pre-Tax Profit at £0.2m (H1 24: £0.2m)
· Statutory profit before tax of £0.1m (H1 24: loss of £0.1m), due to a lower
share based payment expense in the Period
· Cash of £2.3m (FY24: £2.6m), reflecting the lower level of profitability
whilst the M&A markets were subdued, and a dividend payment of £0.2m in
September 2024
· Net cash used by operations of £0.2m, comprising start up loans and working
capital support provided to new licensees who joined in FY24
· Maintained a strong balance sheet with Net Assets of £7.5m (FY24: £7.6m)
· Intention to maintain progressive dividend policy - interim dividend of 1.0p
per share declared, representing one third of the intended total dividend for
FY25 (FY24: 2.0p)
Operational highlights
· Fee Earners increased to 112 at the Period end (H1 24: 104), up 7.7% YoY,
supporting future revenue growth with 49 Partners across 24 licensee
businesses
· 67% weighted towards M&A in H1 25 (H1 24: 73%)
· New Corporate Finance teams in the Midlands and Cardiff, celebrated a
successful first year which saw their combined headcount grow from 5 to 11
Post period end acquisition of DR Solicitors Limited ("DR" or "DR Solicitors")
· Significantly earnings-enhancing and transformational acquisition of award
winning, nationally-recognised law firm, which provides services to GPs,
consultants and other primary care providers in the UK.
· Total consideration £6.1m funded from cash and a new revolving credit
facility ("RCF")
· Achieved organic revenue growth of 11% to generate revenue of £3.1 million
and profit before tax of £1.2 million
· Brings a highly scalable, cash generative, and profitable Legal Platform to
the Group
· Materially reduces the Group's reliance on the cyclical SME M&A market
from 67% of revenue to around a third
Trading update issued 7 November 2024 - upgraded financial guidance for FY25
· FY25 consolidated network revenue is expected to be c.£23.0m (FY24: £16.0m)
- a 43.8% increase on prior year
· Adjusted Pre-Tax Profit in FY25 is expected to be c.£1.45m (FY24: £0.5m) - a
190% increase on prior year
Current trading and outlook
· Momentum gained in September 2024 continued in October, generating exceptional
levels of M&A activity as businesses looked to complete transactions ahead
of the Autumn Budget
· Deal volumes in November and December are likely to be subdued, as many
transactions were brought forward ahead of the Budget, before returning to
normal levels in Q4 25
· FY25 results expected to benefit from usual H2 weighting with recognition of
profit share income, five months' contribution from DR, and an exceptional
M&A performance in October 2024, which delivered increased deal volumes
and values
· Entering H2 25 with a more diversified and resilient business, with a
significantly reduced dependency on M&A activity
· The Board is confident in the Group's growth strategy and continues to invest
in the long-term future of the business
James Dow, Chief Executive Officer, said:
"The Group is stronger than it has ever been. We are delivering on our stated
strategy to diversify, with the previously announced acquisition of DR
Solicitors demonstrating our ability to attract earnings-enhancing niche
service lines to the Group, as well as significantly reducing our historic
reliance on M&A.
"While we are delighted to upgrade our guidance for FY25, and the Board is
confident in the mid to long term prospects for the Group, we remain mindful
of macro-economic and political uncertainties that may yet impact M&A
activity.
"While the recruitment market has tightened, due to the improving M&A
market, the opportunities for DSW and DR remain strong and we look forward to
updating the market further, as the year progresses."
Online Investor Presentation
The management team will host an online H1 25 Results presentation for
investors tomorrow, Tuesday, 26 November 2024, at 3.00pm. Anyone wishing to
join the presentation should register at
https://bit.ly/DSW_H125_results_webinar
(https://url.uk.m.mimecastprotect.com/s/brCgC3yDXtpG68mtgfrHQs8QL) .
Definitions:
Adjusted Pre-Tax Profit - Adjusted pre-tax profit, which is defined as profit
before tax adjusted for items not considered part of underlying trading, which
in the current and prior period represents share based payments, is a non GAAP
metric used by management and is not an IFRS disclosure.
Network Revenue - Network Revenue is defined as total revenue earned by
licensees and DR Solicitors, as opposed to total revenue reported by the
Company
Total income from licensees - Total income from licensees represents statutory
revenue plus share of results in associates
Enquiries:
DSW Capital Tel: +44 (0) 1928 378 100
James Dow, CEO
Shru Morris, CEO Designate
Pete Fendall, CFOO
Shore Capital (Nominated Adviser & Broker) Tel: +44 (0)20 7408 4090
James Thomas/Mark Percy/Rachel Goldstein (Corporate Advisory)
Guy Wiehahn / Isobel Jones (Corporate Broking)
Rawlings Financial PR Limited dswcapital@rfpr.co.uk (mailto:dswcapital@rfpr.co.uk)
Cat Valentine Tel: +44 (0) 7715 769 078
About DSW Capital
DSW Capital, owner of the Dow Schofield Watts and DR Solicitors brands, is a
profitable, mid-market, challenger professional services network with a cash
generative business model and scalable platform for growth. Originally
established in 2002, by three KPMG alumni, Dow Schofield Watts is one of the
first platform models disrupting the traditional model of accounting
professional services firms. DSW Capital operates licensing arrangements with
its businesses and has over 130 fee earners across 12 offices in the UK. These
businesses trade primarily under the Dow Schofield Watts and DR Solicitors
brands.
DSW Capital's vision is for our brands to become the most sought-after
destinations for ambitious, entrepreneurial professionals to start and develop
their own businesses. Through a licensing model, DSW Capital gives
professionals the autonomy and flexibility to fulfil their potential.
Being part of the DSW Capital group brings support benefits in recruitment,
funding and infrastructure. DSW Capital's challenger model attracts
experienced, senior professionals, predominantly with a "Big 4" accounting
firm or "Magic Circle" legal background, who want to launch their own
businesses and recognise the value of DSW Capital's brands and the synergies
which come from being part of the network.
DSW Capital aims to scale its agile model through organic growth, geographical
expansion, additional service lines and acquisitions. The Directors are
targeting high margin, complementary, niche service lines with a strong
synergistic fit with the existing network.
CHIEF EXECUTIVE OFFICER'S STATEMENT
I am pleased to report on the Group's results for six months to 30 September
2024, which were in line with our expectations. More importantly, after
securing these H1 results, the Group delivered an outstanding performance in
October 2024, driven by exceptionally strong levels of M&A activity and
completions ahead of the Autumn Budget on 30 October 2024, and successfully
acquired DR Solicitors.
The Board would like to thank all our Licensee Partners and Employees for
their resilience, hard work and commitment to the DSW brand and welcome our
new colleagues at DR.
Network Revenue in the Period was £7.8m, compared to £7.3m in H1 24. This
resulted in similar Total Income from Licensees in the Period of £1.1m (H1
24: £1.1m) and a small reduction in Adjusted Pre-Tax Profit to £153k (H1 24:
£190k).
The Group's cash at the half year end was in line with management expectations
at £2.3m (FY24: £2.6m), reflecting the low level of profitability whilst the
M&A markets were subdued, and a dividend payment of £0.2m in September
2024.
The central office team is continuing to deliver outstanding support to all
our licensees, both new and existing. We concluded the first half of the year
with our Group conference, which was attended by around 100 partners,
employees, and central office team members.
The agenda was packed with exciting highlights, including the launch of our
new DSW Intranet site, which has been designed to enhance collaboration and
knowledge sharing among our teams. We also celebrated individual successes at
the inaugural DSW Impact Awards, recognising the remarkable contributions of
individuals from across DSW.
Our licensee recruitment was focused on organic recruitment in the Period,
reflecting the rising levels of M&A activity anticipated by our licensees,
as shown in the table below.
FY23 H1 FY24 FY24 H1 FY25
Partners 42 48 50 49
Employees 55 56 57 63
Total Fee Earners 97 104 107 112
Vision and strategy
DSW Capital is the owner of the Dow Schofield Watts brand, which is the
predominant brand it licences to licensee businesses, and DR Solicitors, our
legal services brand. Our vision is to become the most sought-after
destination for ambitious, entrepreneurial professionals to start and develop
their own businesses. We aim to scale the business through organic growth,
adding new service lines and expanding our geographic footprint, but also
through acquisitions, and investing in "Break Outs", which extracts existing
teams from larger firms.
FY23 H1 FY24 FY24 H1 FY25
Licensee businesses 21 25 25 24
Conditions in the partner recruitment market appeared to tighten in the
Period, perhaps also reflecting the upturn in M&A activity anticipated in
the run up to the Autumn Budget on 30 October 2024.
As at 30 September 2024, we have increased the number of Fee Earners in the
Network by 30 or 36.6%, since IPO in December 2021.
We are in constant dialogue with businesses looking to join DSW and
successfully acquired DR Solicitors shortly after the Period end. This
acquisition brings a highly scalable, cash generative, and profitable Legal
Platform to the Group. Importantly, and in line with the Board's stated
diversification strategy, the acquisition materially reduces the Group's
reliance on the cyclical SME M&A market from 67% of revenue to around a
third.
The cultural synergies between the two businesses are excellent, with DR
Solicitors' strong, proven and committed management team sharing DSW
Capital's vision and ambition.
DR Solicitors provides legal services to GPs and Primary Care Networks ,
broadening the Group's offering whilst enabling DSW Capital to continue to
enjoy its strong referral network in the other markets in which it operates.
The Acquisition of DR Solicitors is expected to be immediately and
significantly earnings-enhancing.
People
On 5 August 2024, we appointed Shrutisha ("Shru") Morris as the Deputy CEO. We
were extremely fortunate to have found such a capable and committed executive.
She has quickly earned the respect of our stakeholders, and I am delighted to
confirm today that she has been appointed as CEO Designate, and, as of 1 April
2025, Shru will become Chief Executive of DSW Capital.
My decision to transfer the CEO responsibilities has been taken to maximise
the prospects of the Group and I am sure Shru will take the business forward
with calmness, vigour and enthusiasm.
My new role as an Executive Director, thereafter, will be to provide the other
executive directors with ongoing strategic counsel. I also expect to continue
to play a vital role in attracting new businesses and partners to the Group,
as well as fulfilling an Ambassadorial role for both our DSW and Pandea
networks, of which I am a founder.
In addition to the above, following Pete Fendall's exemplary service as COO
& Interim CFO, I am delighted to confirm that he has today been appointed
as our Chief Finance & Operating Officer. This promotion is a testament to
his unwavering dedication and the exceptional capabilities he has demonstrated
at DSW.
Dividend
Since the end of the Period, we have acquired DR Solicitors for £6.1m, with
£4.3m in cash, being funded by our cash balances and a three-year RCF of £3m
secured with OakNorth Bank plc. With an exceptional trading result for October
2024 and the immediate contribution from DR Solicitors, we are pleased to
declare an interim dividend of 1.0p per share, representing one third of the
intended total dividend for FY25. The interim dividend will be paid on 10
January 2024 to shareholders on the register on 13 December 2024 with the
shares going ex-dividend on 12 December 2024.
The Board remains committed to its progressive dividend policy.
Current trading and outlook
As previously reported, the momentum gained in September 2024 continued in
October, generating exceptional levels of M&A activity as businesses
looked to complete transactions ahead of the Autumn Budget. Deal volumes in
November and December, however, are likely to be subdued, as many transactions
were brought forward to beat the Budget. We expect activity to return to
normal levels in Q4 25.
The Group's results, which are typically weighted towards the second half of
the financial year due to the recognition of profit share income, will benefit
both from the contribution of DR Solicitors and the exceptional M&A
performance in October 2024, which delivered increased deal volumes and deal
values. As a result, the Board is expecting FY25 consolidated Network Revenue
to be c.£23.0m (FY24: £16.0m), leading to total income of c.£4.7m (FY24:
£2.4m) and Adjusted Pre-Tax Profit of c.£1.45m (FY24: £0.5m).
The Group entered H2 25 in better shape than it has ever been with a more
diversified and resilient business and significantly reduced dependency on
M&A activity. While always mindful of macro-economic and political
uncertainties, the Board is confident in the Group's growth strategy and
continues to invest in the long-term future of the business.
James Dow
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 September 2024
6 months ended 6 months ended
30 Sept 2024 30 Sept 2023
Note £'000 £'000
Continuing operations
Revenue 6 1,088 1,108
Gross profit 1,088 1,108
Share of results of associates 9 20
Share of results of jointly controlled entity 37 45
Administrative expenses (1,144) (1,331)
Operating loss (10) (158)
Adjusted operating profit(1) 42 95
Share based payments expense (52) (253)
Operating loss (10) (158)
Finance income 125 109
Impairment of loans due from associated undertakings - 2
Finance costs (14) (16)
Profit / (loss) before tax 101 (63)
Adjusted Profit before tax(2) 153 190
Share based payments expense (52) (253)
Profit / (loss) before tax 101 (63)
Income tax (35) (40)
Profit / (loss) for the half-year 66 (103)
Total comprehensive income / (expenditure) attributable to owners of the 66 (103)
Company
Earnings / (loss) per share
From continuing operations
Basic 4 £0.003 (£0.005)
Diluted 4 £0.003 (£0.005)
(1) Adjusted operating profit, which is defined as operating profit adjusted for
items not considered part of underlying trading, which in the current and
prior period represents share based payments, is a non GAAP metric used by
management and is not an IFRS disclosure.
(2) Adjusted profit before tax, which is defined as profit before tax adjusted for
items not considered part of underlying trading, which in the current and
prior period represents share based payments, is a non GAAP metric used by
management and is not an IFRS disclosure.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the six month period ended 30 September 2024
Note As at 30 Sept 2024 As at 31 March 2024
£'000 £'000
Non-current assets
Intangible assets 677 696
Property, plant and equipment 319 363
Lease receivable 57 82
Investments 9 1,503 1,499
Investments in associates 9 73 145
Interests in jointly controlled entities 9 34 21
Prepayments and Accrued Income 10 782 800
Deferred Tax asset 2 2
3,447 3,608
Current assets
Trade receivables 10 1,006 839
Prepayments and Accrued Income 10 385 452
Other receivables 10 1,107 978
Current tax asset - 30
Lease receivable 47 49
Cash and bank balances 2,331 2,632
4,876 4,980
Total assets 8,323 8,588
Current liabilities
Trade payables 146 192
Other taxation 159 179
Other payables 29 84
Accruals and Deferred Income 52 94
Current tax liabilities 15 -
Lease liability 154 153
555 702
Net current assets 4,321 4,278
Non-current liabilities
Lease liability 140 218
Dilapidation provision 83 80
223 298
Total liabilities 778 1,000
Net assets 7,545 7,588
Equity
Share capital 55 55
Share premium 5,268 5,268
Share-based payment reserve 550 498
Retained earnings 1,672 1,767
Total Equity attributable to owners of the Company 7,545 7,588
The interim statements were approved and authorised for issue by the Board of
Directors on 22 November 2024 and were signed on its behalf by James Dow,
Chief Executive Officer.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 September 2024
Share capital Share premium Share-based payments reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2023 55 5,271 1,868 701 7,895
Loss for the half-year - - - (103) (103)
Dividends - - - (422) (422)
Share-based payments - - 253 - 253
Issue of shares in period - (3) - - (3)
Balance at 30 Sept 2023 55 5,268 2,121 176 7,620
Profit for the half-year - - - 187 187
Dividends - - - (265) (265)
Share-based payments - - 46 - 46
Issue of shares in period - - - - -
Reserves transfer - - (1,669) 1,669 -
Balance at 1 April 2024 55 5,268 498 1,767 7,588
Profit for the half-year - - - 66 66
Dividends - - - (161) (161)
Share-based payments - - 52 - 52
Issue of shares in period - - - - -
Balance at 30 Sept 2024 55 5,268 550 1,672 7,545
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the six month period ended 30 September 2024
6 months ended 30 Sept 2024 6 months ended 30 Sept 2023
Note £'000 £'000
Profit / (loss) for the half-year 66 (103)
Adjustments for:
Income tax expense 35 40
Net interest income (111) (93)
Depreciation of property, plant and equipment 78 70
Amortisation of intangible assets 22 24
Impairment of loans due from associated undertakings - (2)
Share-based payment expense 52 253
Operating cash inflows before movements in working capital 142 189
Increase in trade and other receivables (215) (326)
Decrease in trade and other payables (166) (186)
Decrease in amounts owed from associates and jointly controlled entities in 60 47
relation to profit share
Cash used by operations (179) (276)
Income taxes received / (paid) 9 (120)
Net cash outflow from operating activities (170) (396)
Investing activities
Purchases of property, plant and equipment (32) (16)
Investments made in period 9 - (986)
Net cash used in investing activities (32) (1,002)
Financing activities
Dividends paid 8 (161) (422)
Lease payments (90) (53)
Lease receivable amounts received 32 -
Interest received 120 109
Costs of issue of ordinary shares - (3)
Net cash used in financing activities (99) (369)
Net decrease in cash and cash equivalents (301) (1,767)
Cash and cash equivalents at beginning of half-year 2,632 4,584
Cash and cash equivalents at end of half-year 2,331 2,817
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL INFORMATION
1. General Information
DSW Capital plc, registered as a public company in England and Wales, with
registered number: 07200401. The principal activity of the Company and its
subsidiaries, DSW Services LLP, DSW Operations Limited and DR Solicitors
Limited (together referred to as the 'Group') is the licensing of the Dow
Schofield Watts and associated brand names for use in the professional
services sector, whilst providing legal services under the DR Solicitors brand
name.
The address of the Company's registered office is:
7400 Daresbury Park
Daresbury
Warrington
WA4 4BS.
The interim condensed consolidated financial information is presented in
Pounds Sterling (£), which is the currency of the economic environment in
which the Group operates. All amounts are rounded to the nearest thousand
(£'000) except when noted.
2. Basis of preparation
This condensed consolidated interim financial information for the 6 months to
30 September 2024 has been prepared in accordance with IAS 34 'Interim
financial reporting' and also in accordance with the measurement and
recognition principles of UK adopted international accounting standards. It
does not include all of the information required for full annual financial
statements and should be read in conjunction with the Annual Report and
Accounts for the year ended 31 March 2024. A copy of the statutory accounts
for that year has been delivered to the Registrar of Companies. The auditors
reported on those accounts: their report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006. This condensed
consolidated interim financial information does not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The
Interim Report has not been audited or reviewed in accordance with the
International Standard on Review Engagement 2410 issued by the Auditing
Practices Board.
Significant Accounting Policies
The accounting policies used in the preparation of the interim financial
information for the six months ended 30 September 2024 are in accordance with
the recognition and measurement criteria of UK Adopted International
Accounting Standards and are consistent with those which were adopted in the
annual statutory financial statements for the year ending 31 March 2024.
Use of estimates and judgements
There have been no material revisions to the nature of estimates and
judgements of amounts reported in prior periods.
Going concern
The interim financial information has been prepared on a going concern basis
as the Directors have reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. The
Group had no debt and £2.3m cash at 30 September 2024.
DSW Capital entered into a £3m revolving credit facility (the "RCF") with
OakNorth Bank plc on 1 November 2024 to help fund the acquisition of DR
Solicitors Limited. The RCF carries an interest rate of 4.5% above the Bank of
England base rate and is subject to standard leverage and interest cover
covenants. The Group's forecasts and projections show that the Group has
sufficient resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report. Accordingly,
the Group continue to adopt the going concern basis in preparing the interim
financial information.
Accounting Developments
In the current year, the Group has applied a number of amendments to IFRS
accounting standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2024. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
Amendment to IAS 1 Classification of Liabilities as Current or Non-current
Amendment to IAS 1 Non-current liabilities with Covenants
3. Adjusted PBT
Adjusted PBT is utilised as a key performance indication for the Group and is
calculated as follows:
Six months ended Six months ended
30 September 2024 30 September 2023
£'000 £'000
Profit / (loss) before tax 101 (63)
Share based payments 52 253
Adjusted PBT 153 190
4. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months ended 30 September 2024 Six months ended 30 September 2023
Earnings £'000 £'000
Earnings for the purposes of basic earnings per share being net profit 66 (103)
attributable to owners of the Company
Effect of dilutive potential ordinary shares: - -
Earnings for the purposes of diluted earnings per share 66 (103)
Six months ended 30 September 2024 Six months ended 30 September 2023
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 21,414,175 21,086,175
per share
Effect of dilutive potential ordinary shares:
Shares held in EBT 512,185 840,185
Weighted average number of ordinary shares for the purposes of diluted 21,926,360 21,926,360
earnings per share
From continuing operations
Six months ended 30 September 2024 Six months ended 30 September 2023
Earnings £ £
Basic earnings / (loss) per share 0.003 (0.005)
Diluted earnings / (loss) per share 0.003 (0.005)
Adjusted earnings per share is included as an Alternative Performance Measure
('APM') and is not presented in accordance with IAS 33. It has been calculated
using adjusted earnings calculated as profit after tax but before:
· Share-based payments expense
The calculation of adjusted basic and adjusted diluted earnings per share is
based on:
Six months ended 30 September 2024 Six months ended 30 September 2023
£'000 £'000
Profit / (loss) after tax on continuing operations 66 (103)
Adjusted for:
Share-based payment expense 52 253
Adjusted earnings for the purposes of adjusted basic and adjusted diluted 118 150
earnings per share
Six months ended 30 September 2024 Six months ended 30 September 2023
Earnings £ £
Adjusted basic earnings per share 0.006 0.007
Adjusted diluted earnings per share 0.005 0.007
Shares held in trust are issued shares that are owned by the Group's employee
benefit trusts for future issue to employees as part of share incentive
schemes. The future exercise of the share awards and options is the dilutive
effect of share awards granted to employees that have not yet vested, and
shares held by the group's employee benefit trust.
Shares held in trust are deducted from the weighted average number of shares
for basic earnings per share. For its adjusted basic measure, the Group uses
the weighted average number of ordinary shares.
5.Profit / (loss) for the year
Profit / (loss) for the year has been arrived at after charging/(crediting):
Six months ended 30 September 2024 Six months ended 30 September 2023
£'000 £'000
Depreciation of property, plant and equipment 78 70
Amortisation 22 24
Employee pension 5 10
Expected credit loss - licence fees 7 8
Expected credit loss - outstanding loans - (2)
Expected credit loss - profit share (7) (7)
6. Revenue
The disclosure of revenue by product line is consistent with the revenue
information that is disclosed for each reportable segment under IFRS 8.
Disaggregation of revenue
Six months ended 30 September 2024 Six months ended 30 September 2023
£'000 £'000
External revenue by product line
Licence Fee Income 1,081 1,108
Profit Share Income 7 -
Total Revenue 1,088 1,108
A further breakdown of revenue by reporting line is shown below:
Six months ended 30 September 2024 Six months ended 30 September 2023
£'000 £'000
External revenue by reporting line
Licence fees attributable to Mergers & Acquisitions (M&A) 722 800
Licence fees attributable to Other 359 308
Profit share attributable to M&A 7 -
Total Revenue 1,088 1,108
7. Taxation
Tax for the Period is charged at 25% (6 months ended 30 September 2023: 25%;
year ended 31 March 2024: 25%), representing the best estimate of the average
annual effective tax rate expected for the full year, applied to the pre-tax
income of the 6 month period.
8. Dividends
The final ordinary dividend for the year ended 31 March 2024 of £0.075 per
share as proposed in the 31 March 2024 financial statements and approved at
the Group's AGM was paid on 27 September 2024.
In addition, since the end of the half-year the Directors have recommended the
payment of an interim dividend of 1.00 pence per fully paid ordinary share.
The proposed interim dividend was approved by the Board on 18 November 2024.
The dividend will be paid on 10 January 2025 to shareholders on the register
on 13 December 2024 with the shares going ex-dividend on 12 December 2024. In
accordance with IAS10 "Events after the Balance Sheet Date", these dividends
have not been reflected in the Interim Report.
9. Investments
Group Group
As at 30 September 2024 As at 31 March 2024
£'000 £'000
Financial assets measured under the equity method
Investment in Associates 73 145
Investment in jointly controlled entities 34 21
Financial assets measured at amortised cost
Other investments 1,503 1,499
Total Investments 1,610 1,665
The movement in Investment in Associates and Investments in jointly controlled
entities is included in the cashflow statement as a decrease in amounts owed
from associates and jointly controlled entities in relation to profit share.
Where long-term loans are made to licensees, which are disclosed within "Other
investments" above, the Directors of the Company have accounted for them as
investments under IFRS 9. These loans are accounted for using the amortised
cost method.
10. Trade and other receivables
Group Group
As at 30 September 2024 As at 31 March 2024
£'000 £'000
Trade receivables 1,088 914
Loss allowance (82) (75)
1,006 839
Other receivables 1,475 1,346
Loss Allowance (368) (368)
1,107 978
Prepayments and Accrued Income 1,168 1,260
Loss Allowance (1) (8)
1,167 1,252
3,280 3,069
Included in prepayments and accrued income are contract assets amounting to
£782k (March 2024: £800k) due in greater than 1 year.
Other receivables are made up from loans due from licensees, and prepayments
and accrued income relates to profit share due from licensees and contract
assets. Amounts due from subsidiary undertakings, in other receivables on the
company statement of financial position, are interest free and repayable on
demand and have been classified as due in greater than one year.
Contract Assets
Amounts relating to contract assets, which are disclosed within prepayments
and accrued income above, are balances that can be classified as incremental
costs of obtaining a revenue contract. These include the breakout incentives
which provide businesses with an initial free-cash injection, as well as the
below-market element of loans offered to licensee businesses.
Amortisation is recognised on a straight-line basis over the life of the
contract. The average remaining length of contract to which these assets
relate is 21.5 Years. In the Period ended 30 September 2024, amortisation
amounting to £13k was recognised within admin expenses (year ended 31 March
2024: £14k was recognised in admin expenses).
As at 30 September 2024 As at 31 March 2024
£'000 £'000
Contract assets
Breakout Incentives 361 369
Below Market Element of Loans to Licensees 433 438
794 807
Current 26 24
Non-Current 768 783
Total Investments 794 807
11. Events after the reporting period
On 4 November 2024, DSW Capital acquired 100% of the shares in DR Solicitors
Limited ("DR"), a nationally recognised law firm, for a total consideration of
£6.1m, satisfied by £4.3m in cash and £1.8m of new ordinary shares of
£0.0025 each in DSW Capital. The cash consideration is being funded from the
Group's cash reserves and a new £3m revolving credit facility (the "RCF").
DSW Capital entered into the RCF with OakNorth Bank plc on 31 October 2024.
The RCF is for an initial 3-year term until 31 October 2027. The facility is
for £3m, and the Company has drawn down the full amount to help fund the DR
Acquisition. The RCF carries an interest rate of 4.5% above the Bank of
England base rate and is subject to standard leverage and interest cover
covenants.
At the time of issuing this Interim Report, the initial accounting for the
acquisition is incomplete. As such, full disclosures will be made in the
financial statements for the year ended 31 March 2025.
12. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. Transactions between the Group and its related parties are
disclosed below.
Related parties are those licensees where the Company is a member of the
related LLP.
Revenue and Cost Recharges
Group entities entered into the following transactions with related parties
who are not members of the Group. All entities other than DSW Investments 2
LLP are licensee businesses. DSW Investments 2 LLP is an entity owned by
current shareholders.
Six months ended 30 September 2024 Six months ended 30 September 2023
Revenue and Cost Recharges Revenue and Cost Recharges
£'000 £'000
PHD Industrial Holdings 104 100
DSW Investments 2 LLP (54) (53)
Other investments 354 274
Totals 404 321
Other investments relate to routine and similar transactions which arose in
the ordinary course of business, with DSW CF Leeds, DSW TS Leeds, DSW Business
Recovery and DSW Bridgewood.
Amounts due from/to related parties
Group entities had the following balances, including loans to related parties,
outstanding at period end with related parties who are not members of the
Group:
30 September 2024 30 September 2023
Amounts due from/(to) related parties Amounts due from/(to) related parties
£'000 £'000
PHD Industrial Holdings 15 15
DSW Investments 2 LLP (36) (32)
Other investments 195 248
Totals 174 231
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