TIDMDSW
RNS Number : 6374Z
DSW Capital PLC
17 May 2023
17 May 2023
DSW CAPITAL PLC
("DSW Capital", "DSW" or the "Group")
(AIM: DSW)
Trading Update and Notice of Final Results
FY23 in line with current market expectations
DSW Capital, a profitable mid-market, challenger professional
services licence network and owner of Dow Schofield Watts brand,
announces the following trading update ahead of its final results
for the year ended 31 March 2023 ("FY23" or the "Period"), which
will be released on 13 July 2023.
Revenue and Adjusted Pre-Tax Profit(1) for FY23 are expected to
be in line with current market expectations.
Network Revenue in FY23 is expected to be flat at GBP18.3m
(FY22: GBP18.3m), as challenging market conditions persisted into
the Group's historically weighted second half. Expected EBITDA is
GBP1.5m (FY22: GBP2.2m), with the change reflecting a full year's
plc costs and additional planned investment in central resource.
Expected Adjusted Pre-Tax Profit(1) is GBP1.4m (FY22: GBP2.0m).
Average Revenue per Fee Earner in the Period was GBP193k (FY22:
GBP237k (2) ), reflecting the previously noted softening of the
M&A market, and reduced utilisation in the second half of the
Period. FY22 levels of Network Revenue have been maintained and the
Group's existing licensees continue to prosper and hold strong
market positions.
Fee earners increased from 88 to 97 in the Period, with five
additions in the first half of FY23 and a further four in October
2022. Existing licensees took a prudent approach to recruitment in
the remaining part of the Period, given the uncertain economic
outlook. The Board remains confident, however, that recruitment
opportunities for partners should improve as FY24 progresses. A
slowdown in activity often provides a catalyst for ambitious
professionals to change firm, in order to take advantage of the
pickup in activity following a lull. In addition, this environment
creates push factors which will generate an increase in candidates
open to a move. DSW remains a desirable place to work for ambitious
people who want to grow their own businesses.
With strong cash balances at the year-end of GBP4.6m (FY22:
GBP4.7m), after paying dividends of GBP1.26m in the Period, the
Group is significantly increasing its investment in recruitment and
has a strong recruitment pipeline. Despite the short-term
challenges facing the business, the Board remains confident in the
long-term prospects for the business and intends to take advantage
of the opportunity to recruit additional fee earners. As new fee
earners settle into the business earnings are expected to return to
growth.
James Dow, Chief Executive Officer of DSW Capital, said:
"While recent economic conditions have, undoubtedly, been
frustrating for both the Group and its stakeholders, we remain
highly motivated and excited by the opportunities our business
model creates. Autonomy and flexibility are true differentiators in
our marketplace, and we believe that DSW will attract increasing
numbers of high-quality professionals, as they seek both change and
financial opportunity.
"We will be investing significantly in recruitment in FY24,
despite the tough markets, remaining 'greedy whilst others are
fearful'. This approach has served us well to date and we believe
we will benefit from this investment in subsequent trading
periods."
(1) Adjusted Pre-Tax Profit excludes share based payment
charge.
(2) Prior year comparative calculated using average Fee Earners
in the Period.
For further information please contact:
DSW Capital
James Dow, Chief Executive Officer Tel: +44 (0) 1928
Nicole Burstow, Chief Financial Officer 378 029
Tel: +44 (0) 1928
378 039
Shore Capital (Nominated Adviser & Broker) Tel: +44 (0)20
James Thomas / John More / Mark Percy 7408 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 operates
licensing arrangements with 20 licensee businesses with 97 fee
earners, across seven offices in England and two 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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END
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