Slide 1: DSW Capital plc Full Year Results FY23
DSW Capital plc Full Year Results FY23 July 2023
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 • 107 licenced fee earners (“FE”) predominantly trading under the DSW brand with 10 locations across England and Scotland. • Licence fee is charged typically on a percentage of revenue. • Provide the inf
Slide 5: Investment Case
Investment Case Cash generative, capital light Scalable and innovative and 70% dividend payout ratio platform model Large market ripe for disruption Continued strong growth in Recurring revenue base FEs The AIM listing is important. It has: o increased our profile to partner candidates; o provided c
Slide 6: Current Service Lines
Current Service Lines Corporate Business Financial Business Finance Equity Finance Recovery Due Diligence Planning Advisory FE=4 FE=20* FE=18 FE=8 FE=37 Forensic Venture Capital Debt Advisory Tax Services Asset Based Wealth Services Funding FE=5 FE=3 Lending Risk Planning FE=5 FE=4 Management FE = 1
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, central marketing and PR License
Slide 9: Central Initiatives
Central Initiatives Our initiatives this year have sought to Launch of DSW Future Rollout of DSW strengthen the business model in three key Leaders Programme Appraisal Framework areas: 1 To attract new recruits and enhance Established DSW Conducted first value provided to existing licensees Mentorin
Slide 10: FY23 Performance Highlights
FY23 Performance Highlights • Network Revenue of £18.3m (FY22: £18.3m) – FY22’s Network Revenue (£m) record performance matched despite challenging H2 18.3 18.3 • Income from licensees* increased 0.3% to £3.0m 15.3 12.4 8.5 • Underlying EBITDA+ decreased by 32.2% to £1.5m, 11.0 reflecting a full yea
Slide 11: FY23 Income Statement
FY23 Income Statement £000s Mar-23 Mar-22 Key Highlights Portfolio Income 18,262 18,284 • Market deal volumes down overall but DSW revenues Licence Income 2,550 2,533 have been maintained. Profit Share Income* 408 459 • Profit share income reduced by 11.1% due to wage Sale of interest in LLP** 40 -
Slide 12: FY23 Balance Sheet
FY23 Balance Sheet £000s Mar-23 Mar-22 £000s Mar-23 Mar-22 Non-current assets Net current assets 5,657 5,626 Intangible assets 748 794 Non-current liabilities Property, plant and equipment 440 525 Lease liability 220 302 Investments 922 922 Dilapidation provision 75 72 Investments in associates 209
Slide 13: Cash Flow Statement
Cash Flow Statement £000s Mar-23 Mar-22 £000s Mar-23 Mar-22 Cash flows from operating activities Operating cash conversion* (%) 88% 105% Profit for the year 485 (334) *Calculated as cash generated by operations divided by Operating cash flows before movements in working capital. Expected OCC to rang
Slide 14: Network KPIs
Network KPIs Fee Earners LTM Portfolio Revenue vs. Fee Earners 97 20 120 18 10.2% YOY growth 100 16 Number of Fee Earners LTM Portfolio Revenue 14 80 Network £18.3M 12 10 60 Revenue 8 40 Consistent with PY 6 4 20 2 0 0 16.6% 1:1.3 Partner to Employee FY19 FY20 FY21 FY22 FY23 Average Licence Fee LTM
Slide 15: Opportunities for growth
Opportunities for growth Acquisition of “Break-outs” licence fees Organic Service line growth extension Geographical expansion Dow Schofield Watts 15
Slide 16: FY24 - DSW Bridgewood
FY24 - DSW Bridgewood • On 12th July 2023, the Group completed a Strategic fit: transaction with Bridgewood Financial Solutions (“Bridgewood”) a Corporate Recovery business Delivers a Rebalances based in Nottingham. Expands step change the Group’s DSW in growth portfolio presence to • Bridgewood wil
Slide 17: 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 18: Recruitment Pipeline
Recruitment Pipeline We have invested in market mapping and recruitment resource through an outsourced relationship to develop our recruitment funnel. Our investment reflects the increased “push” factors encouraging people to seek new opportunities, which is a consequence of a slowdown in activity,
Slide 19: Our ESG journey
Our ESG journey We are still in the early stages of our ESG journey, although we’ve made great progress against our four cornerstones; Social & Environmental Impact Diversity & Inclusion • Reduced our Scope 1 Emissions by 45.9% • Rolled out Diversity & Inclusion training • Scope 1 & 2 Emissions redu
Slide 20: Summary and Outlook
Summary and Outlook Summary • Network Revenue of £18.3m (FY22: £18.3m) – FY22’s record performance matched despite challenging H2 • 25new FEs post-IPO, including Bridgewood – heightened profile and licence model driving recruitment. • Named by Experian as the 11th most active corporate finance advis
Slide 21: Questions
Questions DSW Capital
Slide 22: Appendices
Appendices DSW Capital
Slide 23: 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 24: 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 Greater a multi- Pandea between fees operational infrastruc
Slide 25: Timeline of the Business
Timeline of the Business DSW Network has grown steadily to a team of 107 FE working in 11 service lines (31 March 2023) Aug 2021 – Launch of Debt Advisory DSW CF Advisory May 2012 – launched London was founded as a DSW Forensics based in Dec 2014 PHD boutique corporate the North West with Equity rai
Slide 26: Contact Us
Contact Us Daresbury London Leeds Manchester Stockport 7400 Daresbury Park 60 St Martin’s Lane 4100 Park Approach St James House The Mailbox, Daresbury Covent Garden Thorpe Park 7 Charlotte Street Exchange Street Warrington London Leeds Manchester Stockport WA4 4BS WC2N 4JS LS15 8GB M1 4DZ SK3 0GA R