AI Terminal
DSW CAPITAL PLC
Earnings Release • Nov 27, 2023
7606_ir_2023-11-27_6a52ae1e-920e-4878-9030-8d50c283cccf.html
Earnings Release
Open in ViewerOpens in native device viewer
National Storage Mechanism | Additional information 
RNS Number : 6526U
DSW Capital PLC
27 November 2023
27 November 2023
DSW CAPITAL PLC
("DSW Capital", "DSW" or the "Group")
(AIM:DSW)
Half Year Results
Resilient performance with M&A activity levels returning towards more normal levels
DSW Capital, a profitable, mid-market, challenger professional services licence network and owner of the Dow Schofield Watts brand, is pleased to announce its half year results for the six-month period ended 30 September 2023 ("H1 24" or the "Period").
The Group delivered a resilient performance in H1 24, under challenging market conditions which dominated trading in the first four months of the Period. The Group's licensees reported a return towards more normalised levels of M&A activity over the last two months of the Period, with activity levels continuing to improve post Period end, suggesting that the low point in the cycle may have passed.
Financial highlights
| · | Network Revenue 25.3% lower at £7.3m (H1 23: £9.8m), reflecting subdued M&A activity |
| · | Total income from licensees was 30.9% lower at £1.1m (H1 23: £1.6m) |
| · | Adjusted Pre-Tax Profit reduced to £0.2m (H1 23: £0.9m), after increased investment of £0.2m to capitalise on increasingly favourable recruitment conditions |
| · | Statutory Loss before tax of £0.1m (H1 23: £0.6m Profit) |
| · | Cash of £2.8m (FY23: £4.6m), after the investment of £0.9m in Bridgewood, dividend payment of £0.4m and breakout incentives of £0.2m to new partners |
| · | Net cash used by operations of £0.3m, comprising start up loans and working capital support provided to new licensees. Lock up remains low at 33 days (FY23: 27 days), contributing to a strong balance sheet with Net Assets of £7.6m (FY23: £7.9m) |
| · | Interim dividend of 1.25p per share, representing one third of the intended full year dividend (FY23: 3.76p). We intend to maintain our progressive dividend policy. |
Operational highlights
| · | Fee Earners increased to 104 at the Period end (H1 23: 93), up 11.8% YoY, with Partner numbers increasing 20% from 40 to 48 |
| · | An additional Corporate Recovery licensee was added in July, with DSW supporting the MBO of Bridgewood |
| · | Tax advisory capabilities, a target for the Group, were expanded through supporting DSW Tax Advisory's acquisition of STS Europe |
| · | A new geographic location and office in Leicester was added during the Period with a Corporate Finance team joining the Network under the Breakout Initiative |
| · | Since the Period end, a further geographic location has been added under the Breakout Incentive, which targets existing teams in larger firms, with the launch of a new Corporate Finance business in Cardiff |
| · | Whilst deal volumes have decreased on the prior period (named by Experian* as the 20th most active corporate finance adviser in the UK in the first half of 2023, compared to 10th in the first half of 2022), average deal values across Corporate Finance and Financial Due Diligence have increased from £8m to £14m, reflecting the growing strength and profile of the brand |
*Experian Market IQ: H1 2023 Report
Current trading and outlook
| · | Adjusted Pre-Tax Profit in FY24 expected to be between £1.1m to £1.4m - higher end achievable subject to certain M&A deals completing before the year end |
| · | A further geographic location has been added under the Breakout Incentive, which extracts existing teams from larger firms, with the launch of a new Corporate Finance business in Cardiff in October 2023 |
| · | Three new partners have joined the business, since the Period end, taking the current total to 51 |
| · | DSW Network well positioned to benefit from returning M&A activity levels, which continue to recover |
| · | Early results of recruitment investment are positive - the increase in partners is expected to drive organic fee earner growth |
| · | The Board is confident in the Group's growth strategy and continues to invest in the long-term future of the Network |
James Dow, Chief Executive Officer, said:
"We will continue to seek to grow the business, through diversification with the addition and expansion of new service lines, to improve its resilience and reduce its dependence on corporate finance and due diligence.
"During this favourable time for recruitment, our ongoing investment has delivered three new offices to the Network and expanded our corporate recovery and tax service lines, as well as increasing Partner numbers from 40 to 51. Partner numbers are a lead indicator of future organic Fee Earner growth.
"We will continue to invest in the long-term profitable growth of the business and the delivery of strong returns for all our stakeholders."
Definitions:
Adjusted Pre-Tax Profit - Adjusted operating profit, which is defined as operating profit adjusted for items not considered part of underlying trading, which in the current and prior period represents share-based payments, is a non-GAAP metric used by management and is not an IFRS disclosure
Network Revenue - Network Revenue is defined as total revenue earned by licensees, as opposed to total revenue reported by the Company
Total income from licensees - Total income from licensees represents statutory revenue plus share of results in associates
Lock up - Defined as licence fee and profit share debtors as a proportion of Network Revenue
Enquiries:
| DSW Capital James Dow, Chief Executive Officer Nicole Burstow, Deputy CEO |
Tel: +44 (0) 1928 378 029 Tel: +44 (0) 1928 378 039 |
| Shore Capital (Nominated Adviser & Broker) James Thomas / Mark Percy / Rachel Goldstein Guy Wiehahn / Isobel Jones (Corporate Broking) |
Tel: +44 (0)20 7408 4090 |
| Belvedere Communications Cat Valentine Keeley Clarke |
Tel: +44 (0) 7715 769 078 Tel: +44 (0) 7967 816 525 [email protected] |
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 now operates licensing arrangements with 25 licensee businesses with 106 fee earners, from 12 offices across the UK. 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.
Chief Executive Officer's Statement
I am pleased to report that the Group continued to make progress on its strategic growth plans, despite the challenging market conditions encountered in the first four months of the Period, which impacted our overall trading performance in H1 24.
I am encouraged that our licensees reported more normalised levels of M&A activity in the three months to 31 October 2023, which suggests that we may have passed the low point in the cycle. We expect that M&A activity will continue to recover in the second half and that the Group is likely to achieve Adjusted Pre-Tax Profit between £1.1m to £1.4m in FY24.
The Board would like to thank all our Licensee Partners and Employees for their hard work and commitment to the DSW brand.
Network Revenue in the Period was £7.3m, compared to £9.8m in H1 23. This resulted in a decrease in Total Income from Licensees in the Period to £1.1m (H1 23: £1.6m) and a consequent reduction in Adjusted Pre-Tax Profit to £0.2m (H1 23: £0.9m). The decline in profitability also reflects the significant investment (£0.2m) made into recruitment in the Period, to enable us to capitalise on the increasingly favourable recruitment conditions.
The Group's cash at the half year end was in line with management expectation at £2.8m (FY23: £4.6m), reflecting the investment of £0.9m in Bridgewood, the dividend payment of £0.4m and breakout incentives paid to new partners of £0.2m.
We have continued to strengthen our central infrastructure and support offering in the Period, with greater training and development opportunities for partners and employees, the launch of our ESG Committee and improving our IT capabilities to create greater working efficiencies for our teams. Continually improving and enhancing our service offering increases the attractiveness of the Network to new recruits, adds to the value we provide to our existing licensees and enables us to retain them.
Vision and strategy
DSW Capital is the owner of the Dow Schofield Watts brand, which is the predominant brand it licences to licensee businesses. Our vision is to become the most sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses. We aim to scale the business through organic growth, new service lines and geographic locations, and investing in "Break Outs", which extracts existing teams from larger firms.
We further executed on our strategy in the Period. Fee Earners within our 25 licensed businesses rose to 104, compared with 93 at H1 23, as the Group benefitted from the significant investment in its recruitment resources. We have increased the number of Fee Earners in the Network by 22, or 26.8%, since IPO in December 2021.
The growth in Fee Earners in H1 24 centred on partners, with a new office being launched in Leicester, which was supported by our acquisitions of licensee fee income. Organic recruitment was hampered, as the more demanding trading conditions meant our partners were, understandably, less inclined to recruit replacements for their leavers. Our attrition levels, however, remain low at 12% for the last 12 months. Of our 104 Fee Earners at H1 24, 48 were partners, compared to 40 in the prior year period. This 20% growth in partners is a lead indicator for future organic Fee Earner growth and subsequent organic recruitment.
The Group remains committed to the acquisition of licence fees and further diversification, through the broadening of its service lines. We are in constant dialogue to encourage teams to join DSW and successfully added Bridgewood (Corporate Recovery) and STS Europe (Tax Advisory) in the Period. We are confident that our efforts will continue to bear fruit.
People
After the Period end, on 11 October 2023, Nicole Burstow, our Chief Financial Officer ("CFO") was appointed as Deputy Chief Executive Officer. We are extremely fortunate to have such a capable and committed executive, she is well respected by all our stakeholders, and this appointment reflects that her contribution to the Group has extended far beyond her role for quite some time. Nicole will continue to fulfil her responsibilities as CFO.
Dividend
We maintain a robust cash position with cash balances of £2.8 million and are pleased to declare an interim dividend of 1.25p per share. The interim dividend will be paid on 12 January 2024 to shareholders on the register on 15 December 2023 with the shares going ex-dividend on 14 December 2023.
The Board intends to maintain the total dividend payable for the year at 3.76p (FY23: 3.76p). In line with the Group's stated dividend policy, one third will be paid at the interim. The maintenance of the dividend at last year's level demonstrates our confidence in the medium-term prospects of the Group and we intend to maintain our progressive dividend policy.
Current trading and outlook
Our results are typically weighted towards the second half of the financial year, due to the recognition of profit share income. This year is no exception. The Group will benefit from the contribution from Bridgewood, which joined the Network in July 2023, in the second half, and also from an expected improvement in M&A activity. Whilst M&A activity levels are improving, this market represents a sizeable percentage of Group revenues (H1 24: 73%, H1 23: 73%) and the timing of transactions can change. As such, the Board expects to achieve an Adjusted Pre-Tax Profit in FY24 of between £1.1m to £1.4m. The higher end of this range remains achievable but is subject to the successful completion of certain M&A deals currently scheduled to complete before the year end.
The Board was cautious at the start of the year and remains vigilant to macro uncertainties. We are pleased with the strategic progress being made and continue to seek opportunities to grow the business through licensee growth and diversification, with the addition and expansion of new service lines, to improve its resilience. Since the Period end, we have launched a new Corporate Finance business, based in Cardiff, focused on Wales and the South-West, which has added an additional two partners. A further Partner has also joined the DSW Ventures team post Period end, taking our Partner numbers to 51.
With a strong cash balance (£2.8m) and a robust Balance Sheet (Net Assets of £7.6m), we remain well-resourced to execute our strategy. The strategic progress to date has laid the foundations for future growth and the Board is confident in the medium-term outlook for the Group.
James Dow
Chief Executive Officer,
27 November 2023
Interim consolidated statement of comprehensive income
For the six month period ended 30 September 2023
| 6 months ended 30 Sept 2023 | 6 months ended 30 Sept 2022 | |||
| Note | £'000 | £'000 | ||
| Continuing operations | ||||
| Revenue | 5 | 1,108 | 1,509 | |
| Gross profit | 1,108 | 1,509 | ||
| Share of results of associates | 20 | 124 | ||
| Share of results of jointly controlled entity | 45 | - | ||
| Administrative expenses | (1,331) | (1,075) | ||
| Operating (loss) / profit | (158) | 558 | ||
| Adjusted operating profit1 | 95 | 872 | ||
| Share based payments expense | (253) | (314) | ||
| Operating (loss) / profit | (158) | 558 | ||
| Finance income | 109 | 43 | ||
| Impairment of loans due from associated undertakings | 2 | - | ||
| Finance costs | (16) | (13) | ||
| (Loss) / Profit before tax | (63) | 588 | ||
| Adjusted Profit before tax2 | 190 | 902 | ||
| Share based payments expense | (253) | (314) | ||
| (Loss) / Profit before tax | (63) | 588 | ||
| Income tax | (40) | (170) | ||
| (Loss) / Profit for the half-year | (103) | 418 | ||
| Total comprehensive (expenditure) / income for the half-year attributable to owners of the Company | (103) | 418 | ||
| (Loss) / Earnings per share | ||||
| From continuing operations | ||||
| Basic | 3 | (£0.005) | £0.020 | |
| Diluted | 3 | (£0.005) | £0.020 |
1 Adjusted operating profit, which is defined as operating profit adjusted for items not considered part of underlying trading, which in the current and prior period represents share based payments, is a non GAAP metric used by management and is not an IFRS disclosure.
2 Adjusted profit before tax, which is defined as profit before tax adjusted for items not considered part of underlying trading, which in the current and prior period represents share based payments, is a non GAAP metric used by management and is not an IFRS disclosure.
Interim consolidated statement of financial position
For the six month period ended 30 September 2023
| Note | As at 30 Sept 2023 | As at 31 March 2023 | |||
| £'000 | £'000 | ||||
| Non-current assets | |||||
| Intangible assets | 725 | 748 | |||
| Property, plant and equipment | 387 | 440 | |||
| Investments | 7 | 1,422 | 922 | ||
| Investments in associates | 7 | 132 | 209 | ||
| Interests in jointly controlled entities | 7 | 30 | 39 | ||
| Prepayments and Accrued Income | 8 | 631 | 166 | ||
| Deferred Tax asset | 9 | 9 | |||
| 3,336 | 2,533 | ||||
| Current assets | |||||
| Trade receivables | 8 | 1,077 | 924 | ||
| Prepayments and Accrued Income | 8 | 311 | 350 | ||
| Other receivables | 8 | 834 | 567 | ||
| Cash and bank balances | 2,817 | 4,584 | |||
| 5,039 | 6,425 | ||||
| Total assets | 8,375 | 8,958 | |||
| Current liabilities | |||||
| Trade payables | 86 | 162 | |||
| Other taxation | 146 | 211 | |||
| Other payables | 101 | 76 | |||
| Accruals and Deferred Income | 63 | 133 | |||
| Current tax liabilities | 16 | 95 | |||
| Lease liability | 93 | 91 | |||
| 505 | 768 | ||||
| Net current assets | 4,534 | 5,657 | |||
| Non-current liabilities | |||||
| Lease liability | 173 | 220 | |||
| Dilapidation provision | 77 | 75 | |||
| 250 | 295 | ||||
| Total liabilities | 755 | 1,063 | |||
| Net assets | 7,620 | 7,895 | |||
| Equity | |||||
| Share capital | 55 | 55 | |||
| Share premium | 5,268 | 5,271 | |||
| Share-based payment reserve | 2,121 | 1,868 | |||
| Retained earnings | 176 | 701 | |||
| Total Equity attributable to owners of the Company | 7,620 | 7,895 | |||
The interim statements were approved and authorised for issue by the Board of Directors on 24 November 2023 and were signed on its behalf by James Dow, Chief Executive Officer.
Interim consolidated statement of changes in equity
For the six month period ended 30 September 2023
| Share capital | Share premium | Share-based payments reserve | Retained earnings | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 April 2022 | 54 | 5,280 | 1,174 | 1,477 | 7,985 |
| Profit for the half-year | - | - | - | 418 | 418 |
| Dividends | - | - | - | (890) | (890) |
| Share-based payments | - | - | 314 | - | 314 |
| Issue of shares in period | 1 | - | - | - | 1 |
| Balance at 30 Sept 2022 | 55 | 5,280 | 1,488 | 1,005 | 7,828 |
| Profit for the half-year | - | - | - | 67 | 67 |
| Dividends | - | - | - | (371) | (371) |
| Share-based payments | - | - | 380 | - | 380 |
| Issue of shares in period | - | (9) | - | - | (9) |
| Balance at 1 April 2023 | 55 | 5,271 | 1,868 | 701 | 7,895 |
| Loss for the half-year | - | - | - | (103) | (103) |
| Dividends | - | - | - | (422) | (422) |
| Share-based payments | - | - | 253 | - | 253 |
| Issue of shares in period | - | (3) | - | - | (3) |
| Balance at 30 Sept 2023 | 55 | 5,268 | 2,121 | 176 | 7,620 |
Interim consolidated statement of cash flows
For the six month period ended 30 September 2023
| 6 months ended 30 Sept 2023 | 6 months ended 30 Sept 2022 | |||
| Note | £'000 | £'000 | ||
| (Loss) / Profit for the half-year | (103) | 418 | ||
| Adjustments for: | ||||
| Income tax expense | 40 | 170 | ||
| Net interest income | (93) | (30) | ||
| Depreciation of property, plant and equipment | 70 | 69 | ||
| Amortisation of intangible assets | 24 | 23 | ||
| Bonus shares / LTIP awards | - | 1 | ||
| Impairment of loans due from associated undertakings | (2) | - | ||
| Share-based payment expense | 253 | 314 | ||
| Operating cash flows before movements in working capital | 189 | 965 | ||
| Increase in trade and other receivables | (326) | (171) | ||
| Decrease in trade and other payables | (186) | (68) | ||
| Decrease in amounts owed from associates and jointly controlled entities in relation to profit share | 47 | 95 | ||
| Cash (used by) / generated by operations | (276) | 821 | ||
| Income taxes paid | (120) | (63) | ||
| Net cash (outflow) / inflow from operating activities | (396) | 758 | ||
| Investing activities | ||||
| Purchases of property, plant and equipment | (16) | (14) | ||
| Investments made in period | 7 | (986) | - | |
| Net cash used in investing activities | (1,002) | (14) | ||
| Financing activities | ||||
| Dividends paid | 6 | (422) | (890) | |
| Finance lease payments | (53) | (51) | ||
| Interest received | 109 | 42 | ||
| Costs of issue of ordinary shares | (3) | - | ||
| Net cash used in financing activities | (369) | (899) | ||
| Net decrease in cash and cash equivalents | (1,767) | (155) | ||
| Cash and cash equivalents at beginning of half-year | 4,584 | 4,722 | ||
| Cash and cash equivalents at end of half-year | 2,817 | 4,567 |
Notes to the interim consolidated financial information
1. General Information
The Company was incorporated as DSW Capital Limited on 23 March 2010 under the Companies Act 2006 (Registration number: 07200401). The Company was re-registered as DSW Capital plc on 26 October 2021. The Company is incorporated and domiciled in England and Wales. The principal activity of the Company and its subsidiaries, DSW Services LLP and Dow Schofield Watts Operations Limited (together referred to as the 'Group') is the licensing of the Dow Schofield Watts brand and associated brand names for use in the professional services sector.
The address of the Company's registered office is:
7400 Daresbury Park
Daresbury
Warrington
WA4 4BS
2. Basis of preparation
This condensed consolidated interim financial information for the 6 months to 30 September 2023 has been prepared in accordance with IAS 34 'Interim financial reporting' and also in accordance with the measurement and recognition principles of UK adopted international accounting standards. It does not include all of the information required for full annual financial statements and should be read in conjunction with the Annual Report and Accounts for the year ended 31 March 2023. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.
The interim condensed consolidated financial information is presented in the Group's functional currency of Pounds Sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.
Significant Accounting Policies
The accounting policies used in the preparation of the interim financial information for the six months ended 30 September 2023 are in accordance with the recognition and measurement criteria of UK Adopted International Accounting Standards and are consistent with those which were adopted in the annual statutory financial statements for the year ending 31 March 2023.
Use of estimates and judgements
There have been no material revisions to the nature of estimates and judgements of amounts reported in prior periods.
Going concern
The interim financial information has been prepared on a going concern basis as the Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has no debt and £2.8m cash at 30 September 2023. The Group's forecasts and projections show that the Group has sufficient resources for both current and anticipated cash requirements.
Accounting Developments
There have been no new standards or interpretations, relevant to the Group's operations, applied in the interim financial information.
Adjusted PBT
Adjusted PBT is utilised as a key performance indication for the Group and is calculated as follows:
| Six months ended 30 September 2023 |
Six months ended 30 September 2022 |
|||
| £'000 | £'000 | |||
| (Loss) / Profit before tax | (63) | 588 | ||
| Share based payments | 253 | 314 | ||
| Adjusted PBT | 190 | 902 |
3. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the following data:
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | ||||||
| Earnings | £'000 | £'000 | |||||
| Earnings for the purposes of basic earnings per share being net profit attributable to owners of the Company | (103) | 418 | |||||
| Effect of dilutive potential ordinary shares: | - | - | |||||
| Earnings for the purposes of diluted earnings per share | (103) | 418 | |||||
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | ||||||
| Number of shares | |||||||
| Weighted average number of ordinary shares for the purposes of basic earnings per share | 21,086,175 | 21,065,045 | |||||
| Effect of dilutive potential ordinary shares: | |||||||
| Share Options | 840,185 | 509,629 | |||||
| Weighted average number of ordinary shares for the purposes of diluted earnings per share | 21,926,360 | 21,574,674 | |||||
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | ||||||
| Earnings | £ | £ | |||||
| Basic (loss) / earnings per share | (0.005) | 0.020 | |||||
| Diluted earnings per share | (0.005) | 0.020 | |||||
Adjusted earnings per share is included as an Alternative Performance Measure ('APM') and is not presented in accordance with IAS 33. It has been calculated using adjusted earnings calculated as profit after tax but before:
| · | Share-based payments expense and |
| · | The tax effect of the above item |
The calculation of adjusted basic and adjusted diluted earnings per share is based on:
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | |||
| £'000 | £'000 | |||
| (Loss) / Profit after tax on continuing operations | (103) | 418 | ||
| Adjusted for: | ||||
| Share-based payment expense | 253 | 314 | ||
| Tax effect of adjustments above | - | - | ||
| Adjusted earnings for the purposes of adjusted basic and adjusted diluted earnings per share | 150 | 732 | ||
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | |||
| Earnings | £ | £ | ||
| Adjusted basic earnings per share | 0.01 | 0.03 | ||
| Adjusted diluted earnings per share | 0.01 | 0.03 |
Shares held in trust are issued shares that are owned by the Group's employee benefit trusts for future issue to employees as part of share incentive schemes. The future exercise of the share awards and options is the dilutive effect of share awards granted to employees that have not yet vested.
Shares held in trust are deducted from the weighted average number of shares for basic earnings per share. For its adjusted basic measure, the Group uses the weighted average number of ordinary shares.
4.(Loss) / Profit for the year
(Loss) / Profit for the year has been arrived at after charging/(crediting):
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | |||
| £'000 | £'000 | |||
| Depreciation of property, plant and equipment | 70 | 69 | ||
| Amortisation | 24 | 23 | ||
| Employee pension | 10 | 3 | ||
| Expected credit loss - license fees | 8 | - | ||
| Expected credit loss - outstanding loans | (2) | - | ||
| Expected credit loss - profit share | (7) | - |
5. Revenue
The disclosure of revenue by product line is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8.
Disaggregation of revenue
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | |||
| £'000 | £'000 | |||
| External revenue by product line | ||||
| License Fee Income | 1,108 | 1,491 | ||
| Profit Share Income | - | 18 | ||
| Total Revenue | 1,108 | 1,509 | ||
A further breakdown of revenue by reporting line is shown below:
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | |||
| £'000 | £'000 | |||
| External revenue by reporting line | ||||
| License fees attributable to Mergers & Acquisitions (M&A) | 800 | 1,142 | ||
| License fees attributable to Other | 308 | 349 | ||
| Profit share attributable to M&A | - | 18 | ||
| Total Revenue | 1,108 | 1,509 |
6. Dividends
The final ordinary dividend for the year ended 31 March 2023 of £0.02 per share as proposed in the 31 March 2023 financial statements and approved at the Group's AGM was paid on 29 September 2023.
In addition, since the end of the half-year the Directors have recommended the payment of an interim dividend of 1.25 pence per fully paid ordinary share. The dividend will be paid on 12 January 2024 to shareholders on the register on 15 December 2023 with the shares going ex-dividend on 14 December 2023. In accordance with IAS10 "Events after the Balance Sheet Date", these dividends have not been reflected in the Interim Report.
7. Investments
| Group | Group | ||
| As at 30 September 2023 | As at 31 March 2023 | ||
| £'000 | £'000 | ||
| Financial assets measured under the equity method | |||
| Investment in Associates | 132 | 209 | |
| Investment in jointly controlled entities | 30 | 39 | |
| Financial assets measured at amortised cost | |||
| Other investments | 1,422 | 922 | |
| Total Investments | 1,584 | 1,170 |
The movement in Investment in Associates and Investments in jointly controlled entities is included in the cashflow statement as a decrease in amounts owed from associates and jointly controlled entities in relation to profit share.
Where long-term loans are made to licensees, which are disclosed within "Other investments" above, the Directors of the Company have accounted for them as investments under IFRS 9. These loans are accounted for using the amortised cost method.
On 12 July 2023, DSW Capital completed a transaction with Bridgewood Financial Solutions Ltd, to acquire licence fee income and provide funding to support a management buyout. As part of the transaction, DSW Capital have provided a long-term loan of £780,000 to Bridgewood. The fair value of the loan has been accounted for as an investment with the below market value element being recorded separately within prepayments and accrued income, both as in accordance with IFRS 9.
8. Trade and other receivables
| Group As at 30 September 2023 |
Group As at 31 March 2023 |
||
| £'000 | £'000 | ||
| Trade receivables | 1,126 | 965 | |
| Loss allowance | (49) | (41) | |
| 1,077 | 924 | ||
| Other receivables | 1,070 | 805 | |
| Loss Allowance | (236) | (238) | |
| 834 | 567 | ||
| Prepayments and Accrued Income | 947 | 528 | |
| Loss Allowance | (5) | (12) | |
| 942 | 516 | ||
| 2,853 | 2,007 |
Included in prepayments and accrued income are £631k (March 2023: £166k) due in greater than 1 year. Other receivables are made up from loans due from licensees, and prepayments and accrued income relates to profit share due from licensees.
9. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its related parties are disclosed below.
Related parties are those licensees where the Company is a member of the related LLP or has significant influence over an entity either via voting rights or shareholding.
Revenue and Cost Recharges
Group entities entered into the following transactions with related parties who are not members of the Group. All entities other than DSW Investments 2 LLP are licensee businesses. DSW Investments 2 LLP is an entity owned by current significant shareholders.
| Six months ended 30 September 2023 | Six months ended 30 September 2022 | ||
| Revenue and Cost Recharges | Revenue and Cost Recharges | ||
| £'000 | £'000 | ||
| PHD Industrial Holdings | 100 | 137 | |
| DSW Investments 2 LLP | 53 | 51 | |
| Other investments | 274 | 320 | |
| Totals | 427 | 508 |
Other investments relate to routine and similar transactions which arose in the ordinary course of business, with DSW CF Leeds, DSW TS Leeds, DSW Business Recovery and DSW Bridgewood.
Amounts due from/to related parties
Group entities had the following balances, including loans to related parties, outstanding at period end with related parties who are not members of the Group:
| 30 September 2023 | 30 September 2022 | ||
| Amounts due from/(to) related parties | Amounts due from/(to) related parties | ||
| £'000 | £'000 | ||
| PHD Industrial Holdings | 15 | 24 | |
| DSW Investments 2 LLP | (32) | (32) | |
| Other investments | 248 | 290 | |
| Totals | 231 | 282 |
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
IR NKQBPABDDCDB