REG - DSW Capital PLC - Trading Update and Notice of Final Results

DSW CapitalAnnouncement

17/05/2023 07:00

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RNS Number : 6374Z  DSW Capital PLC  17 May 2023

17 May 2023

 

DSW CAPITAL PLC

("DSW Capital", "DSW" or the "Group")

(AIM: DSW)

 

Trading Update and Notice of Final Results

FY23 in line with current market expectations

 

DSW Capital, a profitable mid-market, challenger professional services licence
network and owner of Dow Schofield Watts brand, announces the following
trading update ahead of its final results for the year ended 31 March 2023
("FY23" or the "Period"), which will be released on 13 July 2023.

 

Revenue and Adjusted Pre-Tax Profit(1) for FY23 are expected to be in line
with current market expectations.

 

Network Revenue in FY23 is expected to be flat at £18.3m (FY22: £18.3m), as
challenging market conditions persisted into the Group's historically weighted
second half. Expected EBITDA is £1.5m (FY22: £2.2m), with the change
reflecting a full year's plc costs and additional planned investment in
central resource. Expected Adjusted Pre-Tax Profit(1) is £1.4m (FY22:
£2.0m).

 

Average Revenue per Fee Earner in the Period was £193k (FY22: £237k(2)),
reflecting the previously noted softening of the M&A market, and reduced
utilisation in the second half of the Period. FY22 levels of Network Revenue
have been maintained and the Group's existing licensees continue to prosper
and hold strong market positions.

 

Fee earners increased from 88 to 97 in the Period, with five additions in the
first half of FY23 and a further four in October 2022.  Existing licensees
took a prudent approach to recruitment in the remaining part of the Period,
given the uncertain economic outlook. The Board remains confident, however,
that recruitment opportunities for partners should improve as FY24 progresses.
A slowdown in activity often provides a catalyst for ambitious professionals
to change firm, in order to take advantage of the pickup in activity following
a lull. In addition, this environment creates push factors which will generate
an increase in candidates open to a move.  DSW remains a desirable place to
work for ambitious people who want to grow their own businesses.

 

With strong cash balances at the year-end of £4.6m (FY22: £4.7m), after
paying dividends of £1.26m in the Period, the Group is significantly
increasing its investment in recruitment and has a strong recruitment
pipeline. Despite the short-term challenges facing the business, the Board
remains confident in the long-term prospects for the business and intends to
take advantage of the opportunity to recruit additional fee earners. As new
fee earners settle into the business earnings are expected to return to
growth.

 

James Dow, Chief Executive Officer of DSW Capital, said:

 

"While recent economic conditions have, undoubtedly, been frustrating for both
the Group and its stakeholders, we remain highly motivated and excited by the
opportunities our business model creates. Autonomy and flexibility are true
differentiators in our marketplace, and we believe that DSW will attract
increasing numbers of high-quality professionals, as they seek both change and
financial opportunity.

 

"We will be investing significantly in recruitment in FY24, despite the tough
markets, remaining 'greedy whilst others are fearful'.  This approach has
served us well to date and we believe we will benefit from this investment in
subsequent trading periods."

 

(1) Adjusted Pre-Tax Profit excludes share based payment charge.

(2) Prior year comparative calculated using average Fee Earners in the Period.

 

For further information please contact:

 

 DSW Capital

 James Dow, Chief Executive Officer               Tel: +44 (0) 1928 378 029

 Nicole Burstow, Chief Financial Officer          Tel: +44 (0) 1928 378 039

 Shore Capital (Nominated Adviser & Broker)       Tel: +44 (0)20 7408 4090

 James Thomas / John More / Mark Percy

 Guy Wiehahn / Isobel Jones (Corporate Broking)

 Belvedere Communications

 Cat Valentine                                    Tel: +44 (0) 7715 769 078

 Keeley Clarke                                    Tel: +44 (0) 7967 816 525

                                                  dsw@belvederepr.com
                                                  (https://url.avanan.click/v2/___mailto:dswcapital@belvederepr.com___.YXAxZTpzaG9yZWNhcDphOm86Yjc0Nzc1ZDRhNmI2ZDQ3ODRiMTU2MDJlZmUzYWIyOWE6NjpiM2UzOjNlNDFhZjMzOTc3YTA5ZmIzMjJlN2ExNDJmOTg4MGVjYWZhNzZkYmI3ZGY2YTQxYzA1YWZlYWI2NjhhYmZjMTg6cDpU)

 

About DSW Capital

 

DSW Capital, owner of the Dow Schofield Watts brand, 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, DSW is one of the first platform models disrupting
the traditional model of accounting professional services firms. DSW operates
licensing arrangements with 20 licensee businesses with 97 fee earners, across
seven offices in England and two in Scotland. These trade primarily under the
Dow Schofield Watts brand.

 

 DSW's vision is for the DSW Network to become the most sought-after
destination for ambitious, entrepreneurial professionals to start and develop
their own businesses. Through a licensing model, DSW gives professionals the
autonomy and flexibility to fulfil their potential. Being part of the DSW
Network brings support benefits in recruitment, funding and infrastructure.
DSW's challenger model attracts experienced, senior professionals,
predominantly with a "Big 4" accounting firm background, who want to launch
their own businesses and recognise the value of the Dow Schofield Watts brand
and the synergies which come from being part of the DSW Network.

 

DSW aims to scale its agile model through organic growth, geographical
expansion, additional service lines and investing in "Break Outs" (existing
teams in larger firms). The Directors are targeting high margin,
complementary, niche service lines with a strong synergistic fit with the
existing DSW Network.

 

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