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

DSW CapitalAnnouncement

15/05/2025 07:00

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RNS Number : 7265I  DSW Capital PLC  15 May 2025

 

15 May 2025

DSW CAPITAL PLC

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

(AIM: DSW)

 

Trading Update and Notice of Results

Further upgrade to FY25 guidance resulting from supernormal M&A
performance

 

DSW Capital, a profitable, mid-market, challenger professional services
licence network and owner of the Dow Schofield Watts and DR Solicitors brands,
announces the following trading update, ahead of the Group's Final Results for
the year ended 31 March 2025 ("FY25" or the "Year"), which will be released on
8 July 2025.

 

Following the transformative, earnings-enhancing acquisition of DR Solicitors
and a significant upgrade to FY25 guidance, resulting from supernormal levels
of 'Beat the Budget' M&A activity, announced earlier in the Year, the
board is delighted to report that FY25 revenue and Adjusted EBITDA are ahead
of current market forecasts.

 

FY25 financial highlights

 

 •    Network Revenue is expected to increase by 61% to a record £25.8m (FY24:
      £16.0m), ahead of  market expectations
 •    Adjusted EBITDA, which is also ahead of forecasts, is expected to almost
      triple to £1.76m (FY24: £0.6m)
 •    Average revenue per fee earner in the Year was £214k (FY24: £153k)
 •    Acquisition of DR Solicitors for a total consideration of £6.1m, satisfied by
      £4.3m in cash and £1.8m of new ordinary shares, bringing a highly scalable,
      cash-generative, and profitable legal platform to the Group
 •    Fee earners increased by 27% to 136 (FY24: 107), following the acquisition of
      DR Solicitors, which brought 20 to the Group, and a further nine fee earners
      joining our existing licensees
 •    Balance sheet is healthy, with cash balances of £2.7m at 31 March 2025 (HY25:
      £2.3m) and net debt of only £0.3m (FY24: £2.6m net cash), following the
      acquisition of DR Solicitors and the drawdown of a new £3.0m RCF to part fund
      the deal
 •    As previously announced, the progressive dividend policy expected to be
      maintained with a proposed final dividend for the Year of 2.0p (FY24: 0.75p)

 

FY25 operational highlights

 

 •    Unprecedented levels of M&A activity created c.£3.0m of supernormal
      Network Revenue in October 2024; with M&A activity levels returning to
      normal levels from November 2024
 •    The integration of DR Solicitors, acquired in November 2024, is going to plan
      with the business performing well, contributing £0.47m to FY25 Adjusted
      EBITDA
 •    Diversification strategy furthered via acquisition of DR Solicitors: The
      Group's dependency on M&A reduced significantly in FY25 to 55% of Total
      Income from licensees (FY24: 68%), with a further substantial reduction to
      around a third expected in FY26 following a full year's contribution from DR
      Solicitors

 

Outlook

 

 •    Shru Morris succeeded James Dow as CEO on 1 April 2025, in line with
      previously announced succession plan. James continues to play a key role in
      the business as Executive Director
 •    DR Solicitors continues to perform in line with the board's expectations, with
      a growing pipeline of opportunities to scale the platform of which the Group
      is actively exploring a number of options.
 •    M&A activity levels in the DSW Network returned to normal post the
      Government's autumn budget and this has continued into the new fiscal year,
      which has started in line with expectations
 •    While the board is ever mindful of the potential for market disruption,
      resulting from the considerable geo-political and economic volatility, it
      remains confident in the prospects for the business and its strategy to build
      shareholder value over the long term

 

Shru Morris, Chief Executive Officer, said:

 

"It is an honour to lead this business and a pleasure that my first
announcement as CEO is such a positive one. We have a great team and I would
like to thank everyone in the DSW Network for their individual contributions
to an outstanding Group performance in FY25, and for their hard work.

 

"DR Solicitors, our newly acquired legal platform business, also performed
well in its first five months with the Group. I thank everyone for their
contribution to our FY25 performance.  The DR platform is highly scalable,
creating a wealth of opportunities for the Group.  Our intention is to expand
into new legal specialisms, and we are actively exploring a number of exciting
options for the business. The pool of candidates working through consultancy
models is vast and growing, and it remains our intention to focus on
accelerating the growth of this business, building, over time, a substantial
platform of diversified, niche legal services.

 

"The global economic disruption may create a more challenging M&A market
in the year ahead, but we are committed to turning those challenges into
opportunities in recruitment, which slowed in FY25 due to the abnormally high
activity levels. Our reliance on M&A revenues, however, is much reduced by
the addition of DR Solicitors with its more predictable revenues, and we have
a more balanced business as we enter FY26.

 

"We shall continue to pursue our strategic goals to diversify, strengthen and
grow the business in the year ahead and to maximise on the opportunities
presented to us."

 

Definitions:

 

Adjusted EBITDA - Adjusted EBITDA is defined as Adjusted profit before tax
adjusted to add back impairment of loans due from associated undertakings,
finance costs, depreciation, amortisation and deduct finance income

 

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 - Statutory Revenue plus share of results of
associates

 

Enquiries:

 

 DSW Capital                                                 Tel: +44 (0) 1928 378 100

 Shru Morris, CEO

 James Dow, Executive Director

 Pete Fendall, CFOO

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

 James Thomas/Mark Percy/George Payne (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.

 

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