REG - DSW Capital PLC - Trading Update

DSW CapitalAnnouncement

15/02/2024 07:00

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RNS Number : 1972D  DSW Capital PLC  15 February 2024

 

15 February 2024

DSW CAPITAL PLC

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

(AIM: DSW)

 

Trading update

 

DSW Capital, a profitable, mid-market, challenger professional services
licence network and owner of the Dow Schofield Watts brand, announces the
following trading update for the year ending 31 March 2024 ("FY 24" or the
"Period").

 

Having seen five consecutive months of improving trading performance through
to the end of December, with licensees reporting a return to more normalised
levels of M&A activity, it is disappointing to report that Network revenue
for January was substantially below our expectations. More significantly, in
February, we have been advised of both slippage to some previously anticipated
deal revenue and, to a lesser extent, deal aborts, which will impact the
Group's FY 24 performance.

 

As a result of these changes, and given the Group's H2 weighting, we now
anticipate FY 24 adjusted pre-tax profit to be in the range of £0.6m to
£0.7m. Given the return to more uncertainty in the broader M&A market,
the Board is now more cautious for the FY 25 outturn.

 

The Group remains profitable, despite the challenging market conditions, and
maintains a healthy cash balance of £2.7m at 31 January 2024, following the
£0.2m dividend payment in that month.

 

James Dow, Chief Executive Officer said:

 

"Whilst it is very disappointing that the improving trend we saw in the
M&A market has stalled, our confidence in the medium-term outlook for the
Group is unwavering, and we remain well positioned for when the M&A market
returns.

 

"In the meantime, we continue to invest in recruitment and to grow the
Network. Diversification into new service lines not reliant on M&A remains
a focus. The business recovery and tax advisory licensees, which were acquired
during the year, have performed well, and we are seeing record numbers of
enquiries from potential new partners and licensees."

 

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 and 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

 

Notes to Editors 

 

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 24 licensee businesses with 106 fee earners,
twelve 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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