DSW Capital PLC Trading Update and Notice of Results (8585S)
November 09 2023 - 2:00AM
UK Regulatory
TIDMDSW
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 GBP7.3m (H1 FY23: GBP9.8m),
resulting in total income from licensees(1) in the Period of
GBP1.1m (H1 FY23: GBP1.6m) and Adjusted Pre-Tax Profit(2) of
GBP0.2m (H1 FY23: GBP0.9m).
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 GBP1.1m to GBP1.4m. 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 GBP2.8m (30 September 2022: GBP4.6m),
reflecting the investment of GBP0.9m in Bridgewood, the dividend
payment of GBP0.4m and breakout incentives paid to new partners of
GBP0.2m.
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
Nicole Burstow, Deputy CEO 378 029
Tel: +44 (0) 1928
378 039
Shore Capital (Nominated Adviser & Broker) Tel: +44 (0)20 7408
James Thomas / Mark Percy / Rachel Goldstein 4090
Guy Wiehahn / Isobel Jones (Corporate Broking)
Belvedere Communications
Cat Valentine Tel: +44 (0) 7715
Keeley Clarke 769 078
Tel: +44 (0) 7967
816 525
dsw@belvederepr.com
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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