Dsw Capital Plc · LSE:DSW
Dsw Capital — FY2022 Earnings Presentation
24 slides from Dsw Capital's earnings presentation, July 2022
Slide 1: DSW Capital plc Full Year Results 2022
DSW Capital plc Full Year Results 2022 July 2022
Slide 2: Disclaimer
Disclaimer The following presentation, including a hard copy of these slides/the talks given by the presenters, the information communicated during any delivery of the presentation and any question and answer session and any document or material distributed at or in connection with the presentation
Slide 3: Today's Presenters
Today’s Presenters Executive Directors James Dow Nicole Burstow Chief Executive Officer Chief Financial Officer James established Dow Schofield Watts LLP in Nicole joined Dow Schofield Watts LLP as Group 2002. Finance Director in April 2019. James is qualified as both a Chartered Nicole previously s
Slide 4: Overview of DSW
Overview of DSW • Challenger “Big 4” mid market professional services network. Joined AIM Dec 21 • 88 licenced fee earners (“FE”) predominantly trading under the DSW brand with 7 locations across England and Scotland. • Licence fee is charged typically on a percentage of revenue. • Provide the infra
Slide 5: Investment Case
Investment Case Scalable and innovative Cash generative, capital light platform model Large market ripe for disruption Recurring revenue base Continued strong growth The AIM listing has: o increased our profile to partner candidates; o provided capital for the acquisition of licence fee income from
Slide 6: Current Service Lines
Current Service Lines Corporate Financial Due Business Business Finance Equity Finance Diligence Recovery Planning Advisory FE=4 FE=16 FE=8 FE=6 FE=35 Asset Based Lending Risk Forensic Angels Network Debt Advisory Tax Services Wealth Management Services FE=4 FE=4 FE=3 Advisory * FE = 2 FE=5 FE = 1 E
Slide 7: The DSW Licence Model
The DSW Licence Model Empowering ambitious professionals to build their own business We recruit highly skilled professionals (typically “Big 4”) in focussed niches of expertise to run their own business and provide services to small to mid market corporates and their owner managers. Licence fee of 2
Slide 8: The DSW Licence Model
The DSW Licence Model Strengths to DSW Capital Strengths to the Licensee Recurring income. Strong perceptions of credentials and capability. Minimal exposure to property and employee Cross referrals and access to multidisciplinary costs. services. Easier recruitment and central marketing and PR Lice
Slide 9: FY22 Performance Highlights
FY22 Performance Highlights Network Revenue (£m) • Maiden results ahead of market expectation. 18.3 • Network Revenue increased 19.6% to £18.3m 15.3 (2021: £15.3m). 12.4 9.3 • Income from licensees* increased 21.8% to £3m. • Underlying EBITDA grew by 21.7% to £2.2m. • Strong cash conversion with £4.
Slide 10: FY22 Income Statement
FY22 Income Statement £000s Mar-22 Mar-21 Key Highlights Portfolio Income 18,285 15,342 • Buoyant M&A market and high quality work delivered has enhanced top line growth. Licence Income 2,531 2,252 Profit Share Income* 459 204 • Profit share income has increased 125% - licensees are Total Income 2,9
Slide 11: FY22 Balance Sheet
FY22 Balance Sheet £000s Mar-22 Mar-21 £000s Mar-22 Mar-21 Non-current assets Net current assets 5,626 1,423 Intangible assets 794 673 Non-current liabilities Property, plant and equipment 525 56 Borrowings - 625 Investments 922 922 Convertible loan notes - 540 Investments in associates 290 97 Lease
Slide 12: Cash Flow Statement
Cash Flow Statement £000s Mar-22 Mar-21 £000s Mar-22 Mar-21 Cash flows from operating activities Operating cash 105% 56% (Loss)/profit for the year (334) 1,258 conversion* (%) *Calculated as cash generated from operations divided by PBT after Adjustments for tax, interest, non cash items 1,701 565 n
Slide 13: Network KPIs
Network KPIs Portfolio Revenue vs. Fee Earners Fee Earners 20 100 88 18 90 14.3% YOY growth 16 80 Portfolio Revenue (£m) Number of Fee Earners 14 70 12 60 Network Revenue £18.3M 10 50 8 40 28.2% 3-year CAGR 6 30 4 20 2 10 16.9% 14% 0 0 Revenue from Cross FY19 FY20 FY21 FY22 Average Licence Fee Refer
Slide 14: Post-IPO Activity
Post-IPO Activity New service line - DSW Asset Based Lending Risk Management. New locations – 2 new partners in Edinburgh and Glasgow and a new office in Manchester. Increased FE’s to 88, 14.3% YoY increase. Named 6th most active corporate finance advisor in the UK in the first quarter of 2022 by Ex
Slide 15: Our ESG journey
Our ESG journey Re-aligned our purpose & values. Undertaken an ESG materiality assessment and developed a bespoke framework. Identifying initiatives and setting targets. Streamlined energy carbon reporting. Detailed ESG report included within our Annual Report. Dow Schofield Watts 15
Slide 16: Opportunities for growth
Opportunities for growth Acquisition of “Break-outs” licence fees Organic Service line growth extension Geographical expansion Dow Schofield Watts 16
Slide 17: The accountancy profession is ready for something new
The accountancy profession is ready for something new….. The “Big 4” are under significant pressure to restructure DSW Differentiators: Partners also continue to benefit from: International Being part of network - A direct link 100% Central Pandea Greater a multi- between fees operational infrastruc
Slide 18: Target Acquisition Service Lines
Target Acquisition Service Lines High margin, high growth, niche professional services where there is a strong synergistic fit. Existing service lines in new locations. Tax related services and family office. Employer solution services. Niche legal services. Other Big 4 (non-audit) service lines. Do
Slide 19: Summary and Outlook
Summary and Outlook Summary • Strong revenue and profit growth in FY22, ahead of original market expectations. • High activity levels driven top line growth and quality of service enhanced licensee margins and revenue per FE. • 14.3% growth in FEs – profile boost from IPO and licence model negating
Slide 20: Questions
Questions DSW Capital
Slide 21: Appendices
Appendices DSW Capital
Slide 22: Summary Investment Thesis
Summary Investment Thesis Why invest? Robust, recurring income stream. Predictable cost base with low operational gearing. Capital light. Scalable platform model. Significant opportunity for organic and acquisition driven growth. Cash backed profits which can support a 70% dividend pay-out ratio bas
Slide 23: Timeline of the Business
Timeline of the Business December 2012 – Dec 2020 – launched VAT Services Launch of Tax Aug 2021 – DSW CF Advisory Advisory North Launch of Debt based in North West Nov 2018 – Launch of was founded as a West Advisory London boutique DSW Ventures (Angel Dec 2014 PHD investment network) corporate fina
Slide 24: Contact Us
Contact Us Daresbury London Leeds Manchester Stockport 7400 Daresbury Park 60 St Martin’s Lane 4100 Park Approach XYZ Building The Mailbox, Daresbury Covent Garden Thorpe Park 2 Hardman Blvd Exchange Street Warrington London Leeds Manchester Stockport WA4 4BS WC2N 4JS LS15 8GB M3 3AQ SK3 0GA Reading