Dsw Capital Plc · LSE:DSW
Dsw Capital — H1 FY2024 Earnings Presentation
25 slides from Dsw Capital's earnings presentation, Nov 27, 2023
Slide 1: DSW Capital plc Interim Results FY24
DSW Capital plc Interim Results FY24 November 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 Deputy CEO & 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
Slide 4: Overview of DSW
Overview of DSW • Challenger “Big 4” mid market professional services network. Joined AIM Dec 21 • 104 licenced fee earners (“FE”) predominantly trading under the DSW brand with 12 locations across England and Scotland. • Licence fee is charged typically on a percentage of revenue. • Provide the inf
Slide 5: Investment Case
Investment Case Capital light to support a Scalable and innovative progressive dividend policy 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 capital
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=17 FE=7 FE=36 Forensic Venture Capital Debt Advisory Tax Services Asset Based Wealth Services* Funding FE=4 FE=4 Lending Risk Planning FE=4 FE=5 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 on-going initiatives strengthen the Completed our first Invested in our IT business model in three key areas: ‘Future Leaders’ Infrastructure programme Invested in new To attract new recruits and enhance 1 Launched our ESG technologies to boost value provided to existing lice
Slide 10: H1 FY24 Performance Highlights
H1 FY24 Performance Highlights • Network Revenue of £7.3m (H1 FY23: £9.8m) Network Revenue (£m) 18.3 18.3 • Results typically weighted to H2 15.3 • Income from licensees* decreased by £0.5m to £1.1m 12.4 8.5 11.0 (H1 FY23: £1.6m) 5.4 10.4 • Underlying EBITDA+ decreased by £0.8m to £0.2m, due to chal
Slide 11: H1 FY24 Income Statement
H1 FY24 Income Statement £000s Sept-23 Sept-22 Key Highlights Portfolio Income 7,309 9,786 • Challenging market conditions. Licence Income 1,108 1,491 • Recent trading more positive. Profit Share Income* 20 102 • Demand for DSW services remains steady. Sale of interest in LLP** - 40 • Profit share i
Slide 12: H1 FY24 Balance Sheet
H1 FY24 Balance Sheet £000s Sept-23 Mar-23 £000s Mar-23 Non-current assets Net current assets 4,534 5,657 Intangible assets 725 748 Non-current liabilities Property, plant and equipment 387 440 Lease liability 173 220 Investments 1,422 922 Dilapidation provision 77 75 Investments in associates 132 2
Slide 13: Cash Flow Statement
Cash Flow Statement £000s Sept-23 Sept-22 £000s Sept-23 Sep-22 Cash flows from operating activities Lock up days* 33 27 Profit for the year (103) 418 *Calculated as amounts owed from Licensees (inc. Profit Share) divided by Network Revenue Adjustments for tax, interest, non-cash items 292 547 Operat
Slide 14: Network KPIs
Network KPIs Fee Earners LTM Portfolio Revenue vs. Fee Earners 104 25 120 11.8% YOY growth 100 20 Number of Fee Earners LTM Portfolio Revenue 80 Network 15 Revenue £7.3M 60 10 25.3% decrease from PY 40 5 20 - 0 15.6% 1:1.2 Partner to Employee H1 FY22 H2 FY22 H1 FY23 H2 FY23 H1 FY24 Average Licence F
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: 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 17: Recruitment Pipeline
Recruitment Pipeline We continue to invest in market mapping and recruitment resource through an outsourced relationship to develop our recruitment funnel. Our investment is reactive to the increased “push” factors and ongoing restructuring in the sector which has created a favourable recruitment en
Slide 18: 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. We are delighted to have now established our ESG Committee who will help to shape and deploy initiatives to continue the progress made to date. The committee is made
Slide 19: Summary and Outlook
Summary and Outlook Summary • Challenging market conditions but recent signs we may have reached the low point in the cycle. • Delivered on strategic objectives with 21.4% YoY growth in partner numbers and the acquisition of licence income from Bridgewood, diversifying from M&A. • 15% CAGR in Fee Ea
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: 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 A direct link 100% Central network - Greater a multi- Pandea between fees operational infrastruc
Slide 24: Timeline of the Business
Timeline of the Business DSW Network has grown steadily to a team of 104 FE working in 11 service lines (30 September 2023) July 2023- DSW Bridgewood Aug 2021 – Launch joins the network of Debt Advisory DSW CF Advisory May 2012 – launched Dec 2014 PHD London was founded as a DSW Forensics based in E
Slide 25: 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