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

DSW CapitalAnnouncement

09/11/2023 07:00

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RNS Number : 8585S  DSW Capital PLC  09 November 2023

 

9 November 2023

DSW CAPITAL PLC

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

(AIM: DSW)

 

Trading update and Notice of Results

 

DSW Capital, a profitable, mid-market, challenger professional services
licence network and owner of the Dow Schofield Watts brand, announces the
following trading update ahead of the Group's Half Year Results for the period
ended 30 September 2023 ("H1 24" or the "Period"), which are expected to be
released on 27 November 2023.

 

As noted in our FY23 results on 13 July 2023, FY24 started under challenging
market conditions, with trading remaining subdued in spring and early summer.
We are pleased to report that our licensees have since seen more normalised
levels of M&A activity in the three months to 31 October, suggesting that
we may have passed the low point in the cycle. Our results, which are
typically weighted towards the second half of the financial year due to the
recognition of profit share income, will benefit from the contribution from
Bridgewood, which joined the Network in July 2023, and expected increased
levels of M&A activity.

 

Network revenue in H1 FY24 was £7.3m (H1 FY23: £9.8m), resulting in total
income from licensees(1) in the Period of £1.1m (H1 FY23: £1.6m) and
Adjusted Pre-Tax Profit(2) of £0.2m (H1 FY23: £0.9m).

 

We have continued to invest significantly in our recruitment capabilities in
the Period, to capitalise on the more attractive recruitment conditions.

 

Whilst activity levels are improving in M&A, this market represents a
sizeable percentage of Group revenues (FY23: c.72%) and the expected timing of
transactions can change. As such, the Board is anticipating that Adjusted
Pre-Tax Profit in FY24 is now likely to be between £1.1m to £1.4m. The
higher end of the range remains achievable but is subject to certain M&A
deals currently scheduled to complete before the year end.

 

The Group's cash at the half year end was in line with management expectation
at £2.8m (30 September 2022: £4.6m), reflecting the investment of £0.9m in
Bridgewood, the dividend payment of £0.4m and breakout incentives paid to new
partners of £0.2m.

 

James Dow, Chief Executive Officer, said:

 

"We were cautious at the start of the year and remain vigilant to macro
uncertainties but believe the medium-term outlook for the Group remains
positive. We continue to execute on our recruitment strategy with significant
investment in our capabilities, which, coupled with favourable recruitment
market conditions, have delivered new offices in Cardiff and Leicester. Our
strategy to acquire licence fee income has also borne fruit with the addition
of Bridgewood (Corporate Recovery) and STS Europe (Tax Advisory). At 30
September, our fee earners totalled 104 of which 48 were partners (30
September 2022: 93 fee earners of which 40 were partners), with the growth in
partners being a lead indicator for future organic fee earner growth."

 

(1) Total income from licensees represents statutory revenue plus share of
results in associates

(2) Adjusted Pre-Tax Profit excludes and share based payment charge

 

Enquiries

 

 DSW Capital

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

 Nicole Burstow, Deputy CEO                       Tel: +44 (0) 1928 378 039

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

 James Thomas / Mark Percy / Rachel Goldstein

 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 now
operates licensing arrangements with 25 licensee businesses with 106 fee
earners, from 11 offices across the UK. 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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