TIDMDSW
RNS Number : 3337N
DSW Capital PLC
20 January 2023
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 which is part of UK law
by virtue of the European Union (Withdrawal) Act 2018. Upon the
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Service, this inside information is now considered to be in the
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20 January 2023
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.
Following a very strong first half performance, the historically
weighted second half to 31 March 2023 is being impacted by the
wider macro-economic conditions and uncertainties, which the Board
believes will result in the Group not achieving current market
expectations.
The Group's stated strategy is to diversify its service lines,
so that it is less dependent on revenue from M&A activity. This
remains work in progress, as it seeks to build more
counter-cyclical services into the network. Corporate finance and
due diligence, however, currently comprise most of its current
network activity.
Several deal completions in these categories paused, during the
well-reported turmoil following the mini budget in September. The
Board had expected activity to normalise, as the political
landscape settled and the Group saw some recovery in the network's
performance in November's results. December is traditionally an
important month for the Group, as the natural month for deal
completions ahead of the seasonal holiday break. Continued deal
slippage and caution in the market, however, led to the Group's
performance in this important month to be significantly lower than
anticipated, as deals were not executed as expected.
Other Group service lines continue to perform well in this
period and in line with the Board's expectations.
In addition, uncertainty arising from the economic outlook has
impacted, and continues to impact, recruitment. No further fee
earners have joined the network since the start of October with fee
earners remaining at 97. The Group is in active discussions with a
number of potential new fee earners and acquisitions, but caution
in the wider market is currently impacting progress in this
area.
Timing on transactions in the Group's M&A focused service
lines, which comprise 70% of its services, will largely dictate the
full year outturn. The quality of the opportunities pipeline is
good but the completion timelines are longer than previously
anticipated. There is currently uncertainty as to the speed of the
recovery in this sector. This leads the Board to revise its
financial guidance for the year ending 31 March 2023 ("FY23"), with
network activity levels in FY23 expected to be broadly similar to
FY22, revenue expected to be between GBP 2.8 million and GBP3.1
million (FY22: GBP3.0 million) and EBITDA expected to be between
GBP1.4 million and GBP1.7 million (FY22: GBP2.2 million).
At 31 December 2022, the Group held cash balances of GBP4.8m
from which it paid a dividend to shareholders of GBP0.4m on 11
January 2023. There is, therefore, significant capital to deploy,
and the Board is continuing to evaluate opportunities to grow the
business through diversification with the addition and expansion of
new service lines.
James Dow, Chief Executive Offer of DSW said:
"Following a very strong first half of the year, the Board is
extremely frustrated by this recent confluence of events which has
stuttered the previous excellent growth experienced by the Group
since our flotation. Whilst there is now a broad range of possible
outcomes for FY23, we have confidence in the robustness of our
business model, strength of the balance sheet and the ability of
our partners to adapt."
Enquiries:
DSW Capital
James Dow, Chief Executive Officer Tel: +44 (0) 1928 378
Nicole Burstow, Chief Financial Officer 029
Tel: +44 (0) 1928 378
039
Shore Capital (Nominated Adviser & Tel: +44 (0) 20 7408
Broker) 4090
James Thomas / John More / Mark Percy
Guy Wiehahn (Corporate Broking)
Belvedere Communications dsw@belvederepr.com
Cat Valentine Tel: +44 (0) 7715 769
Keeley Clarke 078
Tel: +44 (0) 7967 816
525
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 three 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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