DSW Capital PLC Audited Final Results

RNS Number : 6952U

DSW Capital PLC

02 July 2024

2 July 2024

DSW CAPITAL PLC

("DSW Capital", "DSW" or the "Group")

(AIM: DSW)

Audited Final Results

Record number of Fee Earners and Partners

DSW Capital, a profitable, mid-market, challenger professional services licence network and owner of the Dow Schofield Watts brand, is pleased to announce its full year results for the year ended 31 March 2024 ("FY24" or the "Period").

Financial highlights

·	Network revenue of £16.0m (FY23: £18.3m), down 12.5% against a subdued SME M&A market backdrop
·	Group revenue of £2.3m (FY23: £2.7m)
·	Total income from licensees of £2.4m (FY23: £3.0m)
·	Adjusted EBITDA of £0.6m (FY23: £1.5m)
·	Adjusted pre-tax profit of £0.5m (FY23: £1.4m), reflecting lower levels of activity and continuing investment for future growth and expansion
·	Statutory profit before tax of £0.2m (FY23: £0.7m)
·	Earnings per share of 0.4 pence (FY23: 2.0 pence)
·	Strong balance sheet:
	-	cash balances at Period end of £2.6m (FY23: £4.6m) - following acquisitions of Bridgewood and STS Europe, and investment in new start up licensees
	-	Cash conversion for the period of 14% (FY23: 88%) - adjusting for the cost of investment in new start up licensees, cash conversion was 61%
	-	Net assets of £7.6m (FY23: £7.9m)
·	Proposed final dividend of 0.75 pence per share, giving a total dividend per share for the year of 2.00p (FY23: 3.76p) - reduced to reflect current supressed earnings
·	Total dividends paid to shareholders since IPO, including FY24 final dividend, will be 9.98p

Operational highlights

·	Fee Earners at Period end increased to a record level of 107 (FY23: 97), up 10.3%, demonstrating the attractiveness of the Group's licence model and the continuing investment in recruitment
·	Licensees increased from 21 to 25 across 11 service lines
·	Continued to diversify and invest in non-M&A service lines with the addition of Bridgewood Financial Solutions, an insolvency practice in Nottingham
·	Expanded UK tax offering, through supporting the acquisition of STS Europe adding a specialist R&D tax expertise
·	Expanded geographic footprint, with new offices in Leicester, Nottingham, Cardiff and Burscough
·	Re-located offices in London and Leeds, to prime city centre locations to support future expansion in these regions
·	Named by Experian* as the 19^th most active corporate finance adviser in the UK by number of deals in 2023
·	Hosted an International Women's Day event, which celebrated the success of DSW role models within the firm and wider network
·	Launched ESG Committee made up of 10 volunteers from across the DSW Network to drive initiatives

Current trading and outlook

·	The Group enters the new financial year with 25 licensees and a record number of Fee Earners and Partners, creating a strong platform for when market conditions return
·	The new financial year has started in line with expectations
·	The focus remains firmly on recruitment, and we remain confident in the strength of our business model to continue to attract Fee Earners
·	With competitors continuing to experience intense regulatory pressure and disruption, DSW's unique model is increasingly attractive to a large number of professionals who are seeking to take greater control of their careers
·	Investment in recruitment and supporting our existing licensees with improved central infrastructure continues, ensuring that DSW is well positioned for growth

* Experian Market IQ: 2023 Report

James Dow, Chief Executive Officer, said:

"Our strategic aim remains to have a more resilient and diversified group of licensee businesses. At present, corporate finance and due diligence represents the majority of our business (68%, flat vs. the previous year). As communicated at the time of our IPO, DSW aims to scale its licence model through organic growth of existing licensees, recruitment of new licensees, investing in "Break Outs" (existing teams in larger firms) and the acquisition of licence fees.

"We are confident in the strength of our business model to continue to attract Fee Earners, and we have a strong balance sheet to support that. We remain confident that our considerable efforts to both acquire licence fees and recruit teams will continue to bear fruit."

Definitions

Network Revenue is defined as total revenue earned by licensees, as opposed to total revenue reported by the Company

Adjusted Pre-Tax Profit is defined as profit before tax adjusted to add back the items not considered part of underlying trading including share-based payment expense. It is a non-GAAP metric used by management and is not an IFRS disclosure.

Cash conversion is calculated as cash generated by operations divided by operating cash flows before movements in working capital

Total income from licensees represents statutory revenue plus share of results in associates

FY24 is the year ended 31 March 2024

Online investor presentation

An online investor presentation and Q&A will be hosted by the management team today at 1.15pm. To participate, please register with PI World at:

https://bit.ly/DSW_FY24_results_webinar

Dividend and Record Pay Date

The record date for the Group's proposed dividend is 0.75 pence per share, and the dividend payment date is 27 September 2024. The ex-dividend date is 12 September 2024.

Notice of AGM

The Group's annual general meeting ("AGM") will be held on 24 September 2024 at 10am at the Midland Hotel Manchester, 16 Peter St, Manchester M60 2DS. Notice of the AGM will be posted with copies of the Group's report and accounts on 22 August 2024. Copies will also be available at this date on the Group's website: Investors - Dow Schofield Watts (dswcapital.com)

Enquiries:

DSW Capital

James Dow, CEO

Pete Fendall, COO & Interim CFO

Tel: +44 (0) 1928 378 029

Tel: +44 (0) 1925 915 034

Shore Capital (Nominated Adviser and 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

dsw@belvederepr.com

Notes to Editors 

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 25 licensee businesses with 107 fee earners, eleven 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.

Chair's Statement

On behalf of the Board, I would like to start by thanking all colleagues across the business for their unwavering commitment and support throughout the year. Below are DSW Capital's results for the year ended 31 March 2024.

Throughout FY24, we have continued to experience frustrating economic conditions that continue to impact confidence in the SME M&A market. Despite this, the DSW licensee businesses have demonstrated their remarkable resilience by delivering £16.0m of Network Revenue, only a 12.5% reduction on the prior year. It was great to see that the DSW Network, which comprises 25 licensee businesses, was named by Experian as the 19^th most active corporate finance adviser (by number of deals) in the UK in 2023, having consistently been ranked within the Top 20 Most Active Finance Advisers in the UK for the last four years.

Our priority of recruiting new Partners and Fee Earners this year has meant that we were able to grow the number of Fee Earners, including Partners, from 97 to a record number of 107, an increase of 10.3% (FY23: 10.2%), whilst the number of partners rose from 42 to 50.

DSW continues to maintain a strong balance sheet and an excellent capital base from which to grow the business, both organically and through the strategic acquisition of talented individuals and teams as opportunities arise.

Long-term vision and strategy

DSW's long-term 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, the addition of new service lines and geographic locations, strategic acquisition of licence fees, and investing in "Break Outs" (existing teams in larger firms).

Our focus with these initiatives remains on attracting high margin, complementary, niche service lines with a strong synergistic fit with the existing DSW Network.

Partner recruitment is fundamental to long-term shareholder value, and we believe our significant investment in recruitment in FY24 has delivered strong results, with the number of partners rising by 19.0%. We anticipate the benefits of our investment in FY24 will continue to be felt in FY25 and beyond.

New Additions to the Network

During the year, we expanded our geographical footprint and welcomed two new businesses, DSW CF Midlands and DSW CF Advisory (Cardiff) under the "Breakout Initiative". We welcomed Bridgewood Financial Solutions, a corporate recovery business based in Nottingham, to the DSW Network and supported our existing Tax practice with the acquisition of STS Europe, a tax advisory business based in the North-West.

People and Diversity

Our colleagues remain central to everything we do and achieve. Creating a positive dynamic culture, which is attractive to talent and in which our people can thrive, remains our top priority.

Diversity is at the core of DSW's model and a cornerstone of our ESG Strategy. We recognise that a broad range of perspectives benefits the progression and success of our business. DSW's commitment to diversity extends beyond gender to ethnicity, sexual orientation, gender identity, social mobility, disability and other challenges which may lead to disadvantage in other environments. DSW is committed to creating a diverse and inclusive environment for its licensees and employees, and this continues to be a core value, as new professionals and businesses are welcomed to the Network.

Technology

We continue to invest in the right technologies to protect our licensees and their clients, whilst also keeping pace with the rapidly changing IT landscape, to embed efficiencies and enhance the value and quality of service provided to our licensees. With this investment, our licensees are able to continue to fully embrace the flexibility and autonomy afforded to them by the DSW model, choosing how and where their teams work to help maintain a strong work life balance and increase collaboration.

During the Period, we invested in additional senior IT resource to help shape and implement our IT Strategy and provide industry leading expert advice to the Board. Our key focus areas include continued investment in our cyber security, maintaining excellent IT service levels and providing a platform for future innovation.

People

During the year, Nicole Burstow, Deputy CEO & CFO, tendered her resignation. She stepped down from the Board and left DSW Capital on 17 May 2024. After a careful and diligent recruitment process, we are pleased to be welcoming Shrutisha Morris, who will be appointed as Deputy CEO and join the Board on 1 August 2024.

Furthermore, we were delighted to formally welcome Pete Fendall to the Board as COO and Interim CFO. Pete joined the Board on 1 April 2024.

Board and Governance

The Board consists of five directors, two of whom are executive directors and three non-executive directors. Two of the non-executive directors, Jillian Jones and I, are considered independent. The current Board reflects a blend of different experience and backgrounds and is considered appropriate for the scale of the business.

The Board is supported by two committees, namely the Audit and Risk Committee and the Remuneration and Nominations Committee, with formally delegated duties and responsibilities.

I am happy to report that DSW has complied with the QCA Corporate Governance Code throughout FY24, and you can find more information on our governance arrangements in the Corporate Governance Statement of the annual report.

Our approach to Risk

DSW takes a proactive approach to risk management, which starts at a strategic level with the Board. Along with the other directors, I continue to closely monitor and identify risks facing the Group and we have strong risk mitigation strategies in place.

DSW has a wealth of compliance and risk experience to support all licensee businesses in related matters and provide them with regulatory guidance. During the current year, DSW introduced an assurance discipline to policy compliance to ensure that defined requirements are being adhered to and the existing policies are being complied with across the DSW Network.

We offer risk management workshops to all licensee businesses, to ensure that the Network follow a clear and consistent format for identifying and assessing risks.

We continue to invest in our compliance support, providing relevant guidance and training to promote a pro-active approach to risk management across the DSW Network.

Environmental, Social and Governance ("ESG")

As a Board, we understand and welcome the increasing importance of ESG to investors, employees, and clients. We are committed to creating positive interactions with all stakeholders and intend to demonstrate this over the long-term through our approach to ESG. The Group's ESG cornerstones and priority areas remain high on the Board's agenda. We are delighted to publish our ESG report within this year's Annual Report, which provides a review of our progress to date and the meaningful action we are taking in areas in which we can have the most impact.

The Board continues to make voluntary SECR disclosures as it recognises the important role all businesses must play to reduce carbon emissions and increase energy efficiency.

Dividend

The Board remains confident in the long-term prospects for DSW and continues to add new Partners and new licensee businesses to fuel future growth. While confidence in the long-term performance of the Group remains unchanged, the Board acknowledges the suppressed earnings in FY24 and has taken the decision to propose a reduced final ordinary dividend for the year ended 31 March 2024 of 0.75 pence per share, giving a total dividend for the year ended 31 March 2024 of 2.0 pence per share. The Board anticipates maintaining dividends at a reduced level until market conditions improve and earnings return to growth.

An interim dividend of 1.25 pence per share in respect of the six months to 30 September 2023 was paid on 23 January 2024.

If approved by shareholders, this will take total cumulative dividends that will be paid out to shareholders post-IPO to 9.98 pence per share.

Outlook

While recognising that economic conditions remain volatile, I am confident in the Group's ability to continue to deliver on its growth strategy. As a Board, we firmly believe that DSW is an attractive alternative to the Big 4 accounting firms, which enables talented professionals to achieve their potential and provide a bespoke, personalised service. Several of our competitors continue to experience intense regulatory pressure and disruption, making our unique model increasingly attractive to a large number of professionals who are seeking to take greater control of their careers. The Board looks forward to FY25 with optimism and remains excited about the long-term prospects for the Group.

Heather Lauder

Independent Non-Executive Chair

1 July 2024

Chief Executive Officer's Review

I am pleased to report on the year ended 31 March 2024, a year of significant progress in terms of partner recruitment, which is fundamental to long-term shareholder value, but at the same time a year of continued trading challenges for our licensee partners as the SME M&A market remained subdued throughout the year.

The SME M&A market continues to feel the impact of higher costs of capital and consequently lower company valuations. The adjustment to lower valuations results in both lower levels of transactional activity but also reduced utilisation as transactions become more protracted.

The Network Revenue achieved in FY24 was down 12.5% to £16.0m (FY23: £18.3m) reflecting a decline of 20.6% in average revenue per Fee Earner to £153k (FY23: £193k). However, this was mitigated by a 10.3% increase in fee earners to 107 (FY23: 97), driven by our investment in recruitment and acquisitions.

Resilient Profitability

Adjusted profit before tax decreased by 64% to £0.5m (FY23: £1.4m), with the decline in profitability chiefly attributable to lower levels of licensee activity but also increased investment in partner recruitment and reflecting the Board's decision to increase provisions in FY24 against balances owed by licensees, primarily a departing licensee.

Revenue for the Group was £2.3m (FY23: £2.7m) and statutory profit for the year was £84k (FY23: £485k) after the deduction of the share-based payment ("SBP") charges.

DSW received an average effective licence fee (including profit share where applicable) of 15.4% (FY23: 16.6%), the reduction reflecting reduced profit share contributions.

With the decline in SME M&A activity since October 2022, our average revenue per Fee Earner has declined 32.6% to £153k from FY22 levels of £227k. Despite the relatively low levels of M&A activity, the business remains resiliently profitable, and with significant potential when the M&A market improves.

Balance sheet strength

The Group's balance sheet remains healthy, with cash balances at 31 March 2024 of £2.6m (FY23: £4.6m), after the acquisitions of Bridgewood and STS Europe (£0.9m combined consideration), investment in new start-up licensees of £0.5m and paying dividends of £0.7m in the Period.

We remain well-resourced to execute on our strategy but have adjusted our dividend payout levels to reflect our current trading position and immediate prospects.

DSW's strategy and delivery against it

Our strategic aim remains to have a more resilient and diversified group of licensee businesses. At present, corporate finance and due diligence represents the majority of our business (68% vs. 68% in the previous year*). As communicated at the time of the AIM listing, DSW aims to scale its licence model through organic growth of existing licensees, recruitment of new licensees, investing in "Break Outs" (existing teams in larger firms) and the acquisition of licence fees.

As we reported last year, we committed significant investment in FY24 in additional central recruitment capability and relaunched our break-out initiative with clearer messaging that we are offering "golden hellos" to new teams. As a direct result of these initiatives, we expanded our geographic footprint with new corporate finance teams being established in the Midlands and Cardiff.

Regarding acquisitions of licence fees, we completed a transaction with Bridgewood, a corporate recovery business based in Nottingham, and supported the acquisition of STS Europe, a tax advisory business based in the North-West. We remain in regular contact with many companies that we admire and continue to work hard to convince them of our attractiveness, as a suitor offering a different solution for stakeholders.

Our focus with these initiatives remains on attracting high margin, complementary, niche service lines with a strong synergistic fit within the existing DSW Network.

Professional headcount

Being a professional services business, our focus is on the recruitment of new partners, new teams and the recruitment of additional Fee Earners to grow existing licensee businesses. Partner recruitment is fundamental to long-term shareholder value.

At the year-end, the number of Fee Earners, including partners, had grown from 97 to a new record number of 107, an increase of 10.3% (FY23: 10.2%), and the number of partners rose from 42 to 50.

Our acquisitions increased our professional headcount by 13 and recruitment of new licensee businesses added 10 professionals. However, headcount in existing licensees declined by 13.

The decline in professionals in existing licensees was predominantly borne by the departures of our Forensic and Aberdeen based businesses, but existing licensees preferred to take a more prudent approach to recruitment choosing to defer backfilling roles.

Since March 2013, the number of Fee Earners has increased from 30 to 107, which equates to an 11-year compound annual growth rate ("CAGR") of over 12%, and an increase of 25 (30.5%) since the admission to AIM in December 2021, just over two years ago.

For most of FY24, the partner recruitment market has been favourable, with the candidate pool strong in quality but the continued economic uncertainty has increased caution in those seeking change.

Empowering professionals

Since launching the business in 2002 as a three-man start-up, we have focussed on attracting others to our path, to build their own mid-market challenger professional service businesses. We finished the year with a record 25 licensee businesses in our network (FY23: 21).

Our vision to become the most sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses is underpinned by our focus is on partners, rather than clients.

This focus on people is our super-power. Other professional firms will profess the importance of people but position their services and capabilities towards their clients. DSW's clients are our partners. The strength of our business model is our clear focus on helping people meet their aspirations.

Our partners and their teams are our greatest ambassadors. On behalf of our shareholders, I would like to take this opportunity to thank DSW partners for their continuing commitment to DSW and all that it stands for.

A growing brand and reputation

DSW must continue to demonstrate that it is a highly attractive proposition for professionals and their clients who work within the UK "mid-market". The quality of DSW's people and their clients is reflected in our average revenues per fee earner of £153k (FY23: £193k). This remains an important metric, we regard the significant reduction as being due to reduced M&A activity levels.

We continue to focus on the quality of our partners as this is fundamental to the strength of our proposition. At 31 March 2024, 47% of employees and partners across the DSW Network previously worked at a Big 4 firm.

DSW's achievements and capabilities are most notable in its original core service areas of corporate finance and due diligence. Our national prominence in M&A was highlighted by an Experian research report for 2023, which marked DSW as the 19^th most active adviser (by number of deals) in the UK.

In November, DSW ranked 56^th in Accountancy Age's top accountancy firms (based on revenue) to the year ended March 2023, compared to the previous year's ranking of 48^th**. A decline reflecting the significant importance of M&A activity to DSW.

International network

DSW has an established partnership network of global advisory firms, called "Pandea Global M&A". Pandea Global M&A comprises selected independent firms with a primary focus on the origination and execution of middle market M&A activities. We believe this network of 33 members, with 350 dealmaking professionals in 65 offices across 31 countries, is the 8^th largest in the world.

The Pandea network increases the DSW Network's access to overseas buyers, investors, and valuable local knowledge, while providing its UK-based clients with access to an enlarged pool of acquisition targets.

The Pandea conference held in Copenhagen in April 2024, attracted over 60 delegates from 25 of the 33 member firms.

Central team

As a team, we remain committed to delivering the highest level of service to our partners. It is the delivery of these services which make it possible for our Fee Earners to focus on delivering high quality work for their clients. The team is young, talented, and extraordinary, and I thank all of them for their considerable efforts in delivering increasing levels of support to our licensees.

Our initiatives this year included the launch of our ESG committee with its leadership covering diversity and inclusion, empowering our people, and social and environmental impact. The committee is led by our Chief Operating Officer, Pete Fendall, and supported by representatives from across our licensees.

In September, we held our first full employee conference - one of the excellent initiatives to emerge from our Future Leaders Programme. The Future Leaders Programme, in conjunction with BecomingX, welcomed its second cohort of 12 employees and partners in January of this year.

These initiatives are right at the heart of supporting our licensee partners and employees to be the best that they can be. These initiatives also increase our connectivity, whilst operational autonomy is at the heart of our model, we continue to reinforce that we are stronger together.

Looking ahead

DSW is a resilient business with a long track record of growth in Fee Earners, but with our roots in M&A advisory we are financially impacted by the current lower levels of deal activity in M&A - particularly in the SME segment.

The Group has entered the new financial year with 25 licensee businesses (FY23: 21) and 107 Fee Earners (FY23: 97), creating a stronger platform for organic growth when market conditions for M&A become more favourable.

The new financial year has started in line with our expectations.

Our focus remains firmly on recruitment, and we remain very confident in the strength of our business model to continue to attract Fee Earners. We have a strong balance sheet and are confident that our considerable efforts to both acquire licence fees and recruit teams will continue to bear fruit.

James Dow

Chief Executive Officer

1 July 2024

* Calculation includes all licencing income including income from associates.

**https://dswcapital.com/dow-schofield-watts-rises-in-accountancy-top-50-50/

Chief Financial Officer's Review

Key Performance Indicators

The following KPIs are used by management to monitor the financial performance of the Group:

	2024	2023	2022
Revenue (£'000)	2,311	2,714	2,681
Total income from licensees (£'000)¹	2,431	2,998	2,990
Adjusted EBITDA (£'000)²	626	1,536	2,233
EBITDA (£'000)	326	841	200
Adjusted PBT (£'000)³	507	1,409	2,002
PBT (£'000)	207	715	(31)
Adjusted PBT margin (%)	21.9	51.9	74.6
PBT margin (%)	9.0	26.3	(1.2)
Net Assets (£'000)	7,588	7,895	7,985

The Group also measures its performance using the following KPIs which are derived from the performance of the DSW Network:

	2024	2023	2022
Total revenue of all Network licensees (£'000)	15,975	18,263	18,285
Revenue per fee earner (£'000)	153	193	227
Revenue per partner (£,000)	320	435	446

Fee Earners (Number)	107	97	88

Despite the economic headwinds posed by challenging market dynamics and subdued SME M&A activity, our unwavering commitment to progress and resilience has yielded remarkable results in recruitment, as we welcomed a record number of new partners to the DSW Network.

FY24 has been a year of investment, doubling down on our recruitment strategy, bolstering and enhancing our recruitment capabilities, whilst continuing to invest in our central infrastructure to set us up for long-term success. We are delighted with the progress to date, having increased our partner numbers by 19% within the year, and added on six new businesses.

We have a talented network of partners and employees, who have demonstrated their resilience and agility over the last twelve months, remaining committed to delivering outstanding solutions and advice to their clients. Whilst Network Revenue and Revenue per fee earner have both declined within the current year, our business remains poised to bounce back once the SME M&A market picks up again.

Our investment in recruitment and central infrastructure, whilst having a short-term impact on profit will position the Group well for the future. FY24 has seen us substantially enhance our partner recruitment capabilities, systems and processes as we have embedded the insights gained over the last twelve months to set us up for further growth in FY25. Our current year initiatives have focused on increasing the appeal of the model to new recruits whilst enhancing the support and value provided to existing licensees, developing future talent and increasing collaboration across the Network.

Income Statement

Revenue and Network Revenue

Network revenue for the year was £16.0m, which is a reduction of 12.5% on the prior year. This is a direct result of the continued trading challenges our licensees have experienced as a result of the SME M&A Market being subdued throughout the year. Whilst we have continued to diversify from M&A within the current year, with the notable additions of Bridgewood and STS Europe, we have also launched two new corporate finance teams in the Midlands and Cardiff, which is a testament to our strong brand recognition in the M&A market. The subdued M&A activity has lowered utilisation and revenue per fee earner by 20.6% to £153k, however revenue per fee earner is also impacted by lower levels of contribution from new start-ups as they build up their pipeline.

Our average effective licence fee has also reduced to 15.4% (FY23: 16.6%) reflecting reduced profit share contributions from some of our licensees. As a result of the contributing factors above, licencing income has fallen by 18.9% to £2.4m.

Fee Earners

In FY24, we invested £0.2m in our partner recruitment capabilities, recognising that the challenging economic conditions would undoubtedly create greater push factors for prospective candidates to explore alternative business models. We are delighted with the progress we have made, as over the last twelve months we welcomed a record number of partners to the DSW Network. Our partner numbers increased from 42 to 50, representing a 19% increase YoY (FY23: 7.7%), and we are therefore entering into FY25 with an excellent platform for growth.

Whilst the economic conditions have created an opportunity for us to successfully boost our partner recruitment, these conditions also lead to licensees to take a cautious approach with their own recruitment as they wait for strong signs of the market picking back up again. We believe the investment in partner recruitment in FY24 will deliver benefits in FY25 and beyond. DSW remains a highly sought after destination for young professionals looking to join ambitious teams, and we look forward to welcoming them once organic recruitment picks up.

Despite a reduction in revenue per Fee Earner from £193k to £153k, this KPI remains comparable to our larger listed peers such as Knights, DWF, Gateley and Keystone Law as well as the Big 4, once adjusted for the impact of new start-up businesses. Our businesses continue to prove their resilience, and to be recognised as award winning experts in their local markets. The strength of the DSW brand continues to grow and our business remains poised to prosper when M&A activity improves, whilst we also remain to be a genuine alternative to the largest firms.

Central Costs

We are committed to maintaining a lean cost base whilst ensuring we provide our licensees with the support they need to thrive and fulfil their potential. We recognise that for our Partners and Employees to be the best that they can be, we need to invest in central initiatives that ensure we remain the best that we can be and provide increased value to our licensees.

Central costs (excluding the share-based payment charge and IPO costs) have increased by £0.39m, on the prior year. Most of the increase relates to our investment in partner recruitment and investment in our central infrastructure, including IT security and innovation.

We are largely insulated from wage inflation as licensee employee costs are borne by the licensee businesses and partners are remunerated based on the fees they bill. The fixed cost base includes 11 people (excluding directors), 8.4 full time equivalents. Similarly, the licensee businesses bear their own property costs or work from home, therefore the Group's exposure to inflationary pressures is limited to one office premises.

In the year, we partnered with Alexander Mann Solutions, as part of our total investment in Partner Recruitment of £0.24m, which yielded successful results in FY24. With this investment, we were able to effectively refine and hone our recruitment strategy, embedding knowledge, systems and processes which will serve the team in future financial years. We also rolled out our IT strategy, which included procurement process to identify a new managed service provider to provide the bandwidth and support needed to enhance IT resilience and enable us to pursue exciting IT Innovation projects. We continued to invest in our marketing team and resources to strengthen the marketing offering we provide to all our licensees, with the introduction of bespoke marketing workshops for our licensees. Following the successful launch of our DSW Future Leaders programme, this had significant benefits for the DSW Network and inspired a lot of initiatives for the future. One such initiative was our first group-wide DSW conference which saw over 80 professionals and support staff come together at the Midland Hotel in Manchester, to share knowledge and ideas whilst also strengthening relationships across the network.

Adjusted PBT and Exceptional Costs

Adjusted PBT is calculated as follows:

	2024 (£000's)	2023 (£000's)
Profit before tax	207	715
Share based payments	299	694
Adjusted PBT	506	1,409

Our Adjusted Pre-tax Profit was £0.5m (2023: £1.4m), which is a decrease of 64.0% on the prior year, reflecting the lower levels of licensee activities, increased provisioning against licensee balances and increase investment in central infrastructure noted above.

We have a share-based payment charge in the year of £0.3m which reflects the accounting impact of the one-off issue of growth shares to partners prior to the IPO and the senior management LTIP. The growth shares were converted to ordinary shares on IPO and there is no dilutive impact on shareholders going forward. The charge was spread over the period from issue to two years post IPO and was fully expensed on 16^th December 2023. The share-based payment charge is expected to reduce to a more normalised basis going forward of £0.2 - £0.3m per annum; solely reflecting the executive LTIP scheme.

Taxation

The effective rate of tax (based on PBT excluding the share-based payments charge which is non-deductible) was 24.3%, slightly below the statutory rate primarily due to the reversal of the prior year over provision. The prior year effective rate (16.3%) was lower due to the reversal of certain costs previously treated as non-deductible.

Earnings Per Share

Earnings per share has been diluted year on year by the shares issued and share re-organisation on IPO. Adjusted basic earnings per share for the year is 2p (2023: 6p). Adjusted EPS removes the impact of the share-based payment charge incurred in the year (as shown above).

Balance Sheet

Cash

The Group's business model is cash generative as the working capital requirement for the licensee businesses, which includes employee and property costs, are borne by the individual licensees. In addition, partners only get paid when their invoices are paid so they are highly motivated to collect cash from clients. The DSW Network lock up equivalent for the year was 28 days (calculated as amounts owed to DSW Capital from licensees divided by Network Revenue), compared to 27 days in the prior year. This remains well below the listed peer group.

Cash generated from operations was £0.09m (2023: £1.35m). Operating cash conversion in the year was 14% which is lower than the prior year (2023: 88%)⁴ largely due to start-up funding provided to new licensee businesses. Operating cash conversion adjusted for loans to new starts was 61% (2023: 101%). Corporation tax payments were £0.2m (2023: £0.2m).

Capital expenditure was minimal in the period (£0.05m) and lease payments of £0.11m relate to the Head Office in Daresbury. Interest income (£0.2m) has been earnt on licensee loans and the Group's cash balances.

The closing cash and cash equivalents balance remains healthy with cash balances as at 31 March 2024 of £2.6m (2023: £4.6m). Cash balances have reduced by £2.0m which is after the acquisitions of Bridgewood and STS Europe (£0.9m combined consideration), investment in new start-up licensees of £0.5m and paying dividends of £0.7m in the Period. The Group continues to hold no debt facility.

Net Assets

The Group has a strong balance sheet with net assets of £7.6m at the year-end (2023: £7.9m). We continue to retain healthy cash resources to enable us to continue to take advantage of current recruitment and strategic acquisition opportunities.

Dividend

While confidence in the long-term performance of the Group remains unchanged, the Board acknowledges the suppressed earnings in FY24 and has taken the decision to propose a reduced final ordinary dividend for the year ended 31 March 2024 of 0.75 pence per share, giving a total dividend for the year ended 31 March 2024 of 2.0 pence per share. The Board anticipates maintaining dividends at a reduced level until market conditions improve and earnings return to growth.

An interim dividend of 2.0 pence per share in respect of the six months to 30 September 2023 was paid on 23 January 2024.

The final dividend will be approved at the Company's AGM which will be held at 10:00 a.m. on 24 September 2024 at The Midland Hotel, Manchester, M60 2DS.

Since IPO in December 2021, the Group will have paid out 9.98 pence per share in dividends, following the approval of the FY24 Final Dividend of 0.75 pence.

Pete Fendall

Chief Operating Officer & Interim Chief Financial Officer

1 July 2024

1 Total income from licensees represents statutory revenue plus share of results in associates.

2 Adjusted EBITDA is defined as Adjusted profit before tax adjusted to add back impairment of loans due from associated undertakings (£130k), finance costs (£22k), depreciation (£144k), amortisation (£59k) and deduct finance income (£236k).

3 Adjusted profit before tax is defined as profit before tax adjusted to add back the items not considered part of underlying trading including share-based payment expense. It is a non-GAAP metric used by management and is not an IFRS disclosure.

4 Cash conversion is calculated as cash generated by operations divided by Operating cash flows before movements in working capital.

Consolidated statement of comprehensive income

For the year ended 31 March 2024

		2024	2023
	Note	£'000	£'000
Continuing operations
Revenue	4	2,311	2,714
Gross profit		2,311	2,714
Share of results of associates	16	120	284
Share of results of jointly controlled entity	17	56	25
Administrative expenses		(2,364)	(2,366)
Operating profit		123	657

Adjusted operating profit		422	1,351
Share based payments expense		(299)	(694)
Operating profit		123	657
Finance income	9	236	104
Impairment of loans due from associated undertakings		(130)	(22)
Finance costs	10	(22)	(24)
Profit before tax		207	715
Income tax	11	(123)	(230)
Profit for the year	6	84	485
Total comprehensive income for the year attributable to owners of the Company		84	485
Earnings per share
From continuing operations
Basic	13	£0.004	£0.02
Diluted	13	£0.004	£0.02

Consolidated statement of financial position

As at 31 March 2024

				As restated (See Note 29)
		2024		2023
	Note	£'000		£'000
Non-current assets
Intangible assets	14	696		748
Property, plant and equipment	15	363		440
Lease receivable	24	82		-
Investments	18	1,499		1,025
Investments in associates	18	145		209
Interests in jointly controlled entities	18	21		39
Prepayments and Accrued Income	19	800		69
Deferred tax asset	21	2		9
		3,608		2,539
Current assets
Trade receivables	19	839		924
Prepayments and Accrued Income	19	452		344
Other receivables	19	978		567
Current tax asset		30		-
Lease receivable	24	49		-
Cash and bank balances		2,632		4,584
		4,980		6,419
Total assets		8,588		8,958
Current liabilities
Trade payables	22	192		162
Other taxation	22	179		211
Other payables	22	84		76
Accruals and Deferred Income	22	94		133
Current tax liabilities	22	-		95
Lease liability	24	153		91
		702		768
Net current assets		4,278		5,651

Lease liability	24	218		220
Dilapidation provision	22	80		75
		298	295
Total liabilities		1,000	1,063
Net assets		7,588	7,895

Equity
Share capital	23	55	55
Share premium		5,268	5,271
Share-based payment reserve	25	498	1,868
Retained earnings	25	1,767	701
Total Equity attributable to owners of the Company		7,588	7,895

Company statement of financial position

As at 31 March 2024

			As restated (See Note 29)
		2024	2023
	Note	£'000	£'000
Non-current assets
Intangible assets	14	696	748
Property, plant and equipment	15	64	40
Lease receivable	24	82	-
Investments	18	1,499	1,025
Investments in associates	18	145	209
Interests in jointly controlled entities	18	21	39
Prepayments and Accrued Income	19	800	69
Other receivables	19	130	-
Deferred tax asset	21	2	9
		3,439	2,139
Current assets
Trade receivables	19	818	869
Prepayments and Accrued Income	19	386	287
Other receivables	19	978	696
Current tax asset		30	-
Lease receivable	24	49	-
Cash and bank balances		2,615	4,563
		4,876	6,415
Total assets		8,315	8,554

Current liabilities
Trade payables	22	81	32
Other taxation	22	166	210
Other payables	22	83	76
Accruals and Deferred Income	22	85	128
Current tax liabilities	22	-	95
Lease liability	24	54	-
		469	541
Net current assets		4,407	5,874
Non-current liabilities
Lease liability	24	91	-
Dilapidation provision		1	-
		92	-
Total liabilities		561	541
Net assets		7,754	8,013

Equity
Share capital	23	55	55
Share premium		5,268	5,271
Share-based payment reserve	25	498	1,868
Retained earnings		1,933	819
Total Equity attributable to owners of the Company		7,754	8,013

The profit after tax for the Company was £132,000 (2023: £497,000). Under s408 of the Companies Act 2006, the company is exempt from the requirement to present its own income statement.

Consolidated statement of changes in equity

For the year ended 31 March 2024

	Share capital	Share premium	Share-based payments reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2022	54	5,280	1,174	1,477	7,985
Profit for the year	-	-	-	485	485
Dividends	-	-	-	(1,261)	(1,261)
Share-based payments	-	-	694	-	694
Issue of shares in year	1	(9)	-	-	(8)
Balance at 31 March 2023	55	5,271	1,868	701	7,895
Profit for the year	-	-	-	84	84
Dividends	-	-	-	(687)	(687)
Share-based payments	-	-	299	-	299
Issue of shares in year	-	(3)	-	-	(3)
Reserves transfer (Note 25)	-	-	(1,669)	1,669	-
Balance at 31 March 2024	55	5,268	498	1,767	7,588

Company statement of changes in equity

For the year ended 31 March 2024

	Share capital	Share premium	Share-based payments reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2022	54	5,280	1,174	1,583	8,091
Profit for the year	-	-	-	497	497
Dividends	-	-	-	(1,261)	(1,261)
Share-based payments	-	-	694	-	694
Issue of shares in year	1	(9)	-	-	(8)
Balance at 31 March 2023	55	5,271	1,868	819	8,013
Profit for the year	-	-	-	132	132
Dividends	-	-	-	(687)	(687)
Share-based payments	-	-	299	-	299
Issue of shares in year	-	(3)	-	-	(3)
Reserves transfer (Note 25)	-	-	(1,669)	1,669	-
Balance at 31 March 2024	55	5,268	498	1,933	7,754

Consolidated cash flow statement

For the year ended 31 March 2024

		2024	2023
	Note	£'000	£'000
Profit for the year		84	485
Adjustments for:
Income tax expense	11	123	230
Net interest income		(214)	(80)
Depreciation of property, plant and equipment	15	144	139
Amortisation of intangible assets	14	59	46
Share-based payment expense	25	299	694
Impairment of loans due from associated undertakings		130	22
Operating cash flows before movements in working capital		625	1,536

Increase in trade and other receivables		(589)	(308)
(Decrease) / Increase in trade and other payables		(32)	41
Decrease in amounts owed from associates in relation to profit share		81	81
Cash generated by operations		85	1,350
Income taxes paid		(241)	(203)
Net cash (outflow) / inflow from operating activities		(156)	1,147

Investing activities
Purchases of IP and trademarks	14	(7)	-
Purchases of property, plant and equipment	15	(43)	(43)
Investments made in the period	18	(1,180)	-

Net cash used in investing activities		(1,230)	(43)

Financing activities
Dividends paid	12	(687)	(1,261)
Lease payments	24	(113)	(77)
Lease receivable amounts received	24	5	-
Interest received		233	104
Share issue costs		(4)	(8)
Net cash used in financing activities		(566)	(1,242)

Net decrease in cash and cash equivalents		(1,952)	(138)
Cash and cash equivalents at beginning of year		4,584	4,722

Cash and cash equivalents at end of year		2,632	4,584

Notes to the financial statements

1. General information

DSW Capital plc, registered as a public company in England and Wales, with registered number: 07200401. The principal activity of the Company and its subsidiaries, DSW Services LLP and DSW 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

The Financial Statements are presented in Pounds Sterling (£), which is the currency of the economic environment in which the Group operates. All amounts are rounded to the nearest £'000 except where noted.

2. Accounting policies

Basis of Preparation

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 434 of the Companies Act 2006.

The results for the year ended 31 March 2024 have been extracted from the full accounts of the Group for that year which received an unqualified auditor's report and which have not yet been delivered to the Registrar of Companies. This preliminary financial information has been prepared on the same basis as the accounting policies adopted in those financial statements but does not include all the disclosures required in financial statements prepared in accordance with UK adopted International Accounting Standards and accordingly does not itself comply with UK adopted International Accounting Standards. The audited financial statements for the year ended 31 March 2024 were approved by the Directors on 1 July 2024.

The financial information for the year ended 31 March 2023 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditor on those filed accounts was unqualified.

The accounts for the year ended 31 March 2024 and 31 March 2023 did not contain a statement under s498 (1) to (4) of the Companies Act 2006. The statutory accounts for the year ended 31 March 2024 will be distributed to shareholders on 22 August 2024, in advance of the Annual General Meeting and made available on our website (https://dswcapital.com/investors/) or on request by contacting the Company Secretary at the Company's Registered Office.

Statement of Compliance

The Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards and has applied in accordance with the provisions of the Companies Act 2006.

The preparation of financial statements in compliance with adopted UK IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in Note 3.

Impact of the initial application of other new and amended IFRS Standards that are effective for the current year

In the current year, the Group has applied a number of amendments to IFRS accounting standards issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

·	IFRS 17 - Insurance Contracts
·	Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies
·	Amendment to IAS 8 - Definition of Accounting Estimates
·	Amendments to IAS 12 - Deferred Tax on Leases and Decommissioning Obligations
·	Amendments to IAS 12 - Deferred Tax Assets and Liabilities related to Pillar Two Income Taxes

New and revised IFRS Standards in issue but not yet effective

In preparing these financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective.

·	IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information
·	IFRS S2 - Climate-related Disclosures
·	Amendments to IFRS 7 - Supplier Finance Arrangements and the Classification and Measurement of Financial Instruments
·	Amendments to IFRS 16 - Measurement of a Sale and Leaseback Transaction
·	IFRS 18 - Presentation and Disclosures in Financial Statements
·	IFRS 19 - Subsidiaries without Public Accountability: Disclosures
·	Amendments to IAS 1 - Classification of Liabilities as current or non-current
·	Amendments to IAS 1 - Classification of Debt with Covenants
·	Amendments to IAS 7 - Supplier Finance Arrangements

The directors do not expect the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.

Basis of accounting

The Financial Statements have been prepared on the historical cost basis, except for the revaluation of financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

The principal accounting policies adopted are set out below.

Going concern

In considering the appropriateness of the going concern basis of preparation, the Directors have considered the cash balance and the forecasts for the next twelve months following the date of this report, which includes detailed cash flow forecasts and working capital availability. These forecasts show that sufficient resources remain available to the business for the foreseeable future. The Group has a significant cash balance of £2.6m, no debt, has a model which is cash generative and a limited fixed cost base. At 31 March 2024, the Group has net assets of £7.6m (2023: £7.9 million) and net current assets of £4.3m (2023: £5.7m) which reflects the strong financial position for the Group. In addition, the Group is profitable with adjusted profit after tax of £0.4m in the year ended 31 March 2024 (£1.2m year end 31 March 2023).

Scenario analysis has been performed on the underlying forecasts and, given the Group's cash balance is over 20% greater than the size of the forecast annual cost base, this demonstrates that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

As such, the Group financial statements have been prepared on a going concern basis as the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Basis of consolidation

The consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved when the Company:

·	has the power over the investee;
·	is exposed, or has rights, to variable returns from its involvement with the investee; and
·	has the ability to use its power to affects its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:

·	the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
·	potential voting rights held by the Company, other vote holders or other parties;
·	rights arising from other contractual arrangements; and
·	any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

Investments in associates and jointly controlled entities

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A jointly controlled entity is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or jointly controlled entities are incorporated in these Financial Statements using the equity method of accounting.

Under the equity method, an investment in an associate or a jointly controlled entity is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate or jointly controlled entity. The Group's share of the profit or loss is driven by the contractual arrangements in place. The Group's share of the profit or loss is defined by the economic interest in the associate or jointly controlled entity as stipulated in the legal arrangements, which differs from the percentage voting rights held.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate or a jointly controlled entity. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a jointly controlled entity.

Other Investments

Where long-term loans are made to licensees, the Directors of the Company have accounted for them as investments under IFRS 9. These loans are accounted for using the amortised cost method. See note 3 for associated critical judgements involved in determining the appropriate classification of long-term loans to licensees.

To determine the fair value of the long-term loans, the Directors of the Company uses the discounted cashflow valuation technique. Differences may arise between the transaction price of the loan at initial recognition and the amount determined at initial recognition using the valuation technique. Any such differences are capitalised in prepayments and accrued income where they are held as Contract Assets and amortised over the loan term.

Revenue recognition

Revenue comprises revenue recognised by the Group in respect of services supplied during the year, exclusive of Value Added Tax.

The Group recognises revenue from the following major sources:

·	Licence fee income
·	Profit share income

Licence fee income is recognised at the point at which the performance obligations, as defined by the contractual arrangements, have been satisfied which is primarily when revenue has been invoiced by the licensees over time. Profit share income is only recognised at the point at which the risk of reversal is deemed to be remote.

Leases

As a lessee

The Group applies IFRS 16 to account for leases. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liabilities.

The lease liability is initially measured at the present value of lease payments that were not paid at the commencement date, discounted using the Group's incremental borrowing rate. The average incremental borrowing rate applied to lease liabilities during the year is 7.80%.

The lease liability is measured at amortised cost using the effective interest method. If there is a remeasurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded directly in profit or loss if the carrying amount of the right-of-use asset is zero.

Short-term leases and low value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less or leases of low value assets. These lease payments are expensed on a straight-line basis over the lease term.

Dilapidations provision

The Group recognises a provision for the future costs of dilapidations on leased office space. The provision is an estimate of the total cost to return applicable office space to its original condition at the end of the lease term.

As a lessor

The Group applies IFRS 16 to account for leases. When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

When the group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.

Amounts due from lessees under finance leases are recognised as receivables at the amount of the group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the group's net investment outstanding in respect of the leases.

Subsequent to initial recognition, the group regularly reviews the estimated unguaranteed residual value and applies the impairment requirements of IFRS 9, recognising an allowance for expected credit losses on the lease receivables.

Finance lease income is calculated with reference to the gross carrying amount of the lease receivables, except for credit-impaired financial assets for which interest income is calculated with reference to their amortised cost (i.e. after a deduction of the loss allowance).

Operating profit

Operating profit is stated after charging the share of results of associates and jointly controlled entities, but before finance income and finance costs.

Retirement and termination benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense in the consolidated statement of comprehensive income in the periods during which services are rendered by employees. Payments made to state-managed retirement benefit plans are accounted for as payments to defined contribution plans where the Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Short-term and other long-term employee benefits

Wages, salaries, paid annual leave and sick leave and bonuses are accrued in the period in which the associated services are rendered by employees of the Group.

Taxation

The income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements and on unused tax losses or tax credits available to the Group. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Property, plant and equipment

Property, plant and equipment is stated in the statement of financial position at cost less accumulated depreciation and accumulated impairment loss.

Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows:

Office equipment	33% straight line
Office fixtures & fittings	20% straight line

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives which are disclosed below. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The estimated useful life of intangible assets is as follows:

Intangible assets

10 - 25 years

The intangibles relate to intellectual property and trademarks acquired.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group's financial assets include cash and cash equivalents and trade and other receivables that arise from the business operations and loans to licensees.

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs.

All recognised financial assets are measured subsequently in their entirety at amortised cost.

Classification of financial assets

Amortised cost and effective interest method

(a)	Trade and other receivables
	Trade receivables are stated at their original invoiced value. Trade receivables are reduced by appropriate allowances for estimated irrecoverable amounts. See Note 3 for details of the loss allowance.

(b)	Loans owing from licensees
	Loans are measured at amortised cost at their effective interest rates. The amortised cost of a loan is the amount at which the loan is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

(c)	Cash and cash equivalents
	Cash and cash equivalents comprise cash on hand and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Interest income is recognised in profit or loss and is included in the "finance income" line item (Note 9).

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on the Group's loans to licensees and trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial asset.

The expected loss rates for these financial assets are based on the Group's historical credit losses experienced over the three-year period prior to the period end. An additional portfolio expected loss provision is calculated in which the historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's licensees. The Group has identified the changing insolvency rates in the UK as the key macroeconomic factor.

(i) Definition of default

The Group considers when a licensee business is terminated or ceases to trade as default events.

(ii) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e., the magnitude of the loss if there is a default), and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

The Group recognises an impairment loss in the consolidated statement of comprehensive income for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Financial liabilities and equity

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest method.

Financial liabilities are included in the statement of financial position as trade and other payables and borrowings.

(a)	Trade and other payables
	Trade payables are stated at their original invoiced value. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

(b)	Borrowings
	All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost and the interest expense is recognised on the basis of the effective interest method and is included in finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Dividend Policy

The Board has adopted a progressive dividend policy to reflect the expectation of future cash flow generation and long-term earnings potential of the Group. The Board may, however, revise the Group's dividend policy from time to time in line with the actual results of the Group.

Dividends are recognised once they have been paid.

Related Party Transactions

Details of related party transactions entered into by members of the Group are set out in Note 30.

Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 25.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of comprehensive income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Finance Income

The Group's finance income includes interest income on long-term loans made to licensees which is calculated using the effective interest method, and interest received on cash and cash equivalents.

3. Critical accounting judgements and key sources of estimation uncertainty

In applying the Group's accounting policies, which are described in note 2, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements.

Consideration of control over a licensee

Where the Group holds voting rights in an underlying licensee, an assessment of the ability to exert control over these entities is made based on whether the Group has the practical ability to direct the relevant activities of these entities unilaterally. Investments in associates have been recognised for entities where the Group holds between 20% and 50% of the voting rights and does not have any unilateral powers other than protective ones. Where the Group has more than 20% of the voting rights, it is deemed to have significant influence over the licensees and thus they are accounted for as investment in associates.

There is one entity in which the Group has 51% of the voting rights and 16.7% of the economic rights. However, all significant operational decisions require the unanimous consent of the parties. As such this entity has been recognised as an investment in a jointly controlled entity.

Classification of long-term loans to licensees

Where long-term loans are made to licensees, these are accounted for as investments under IFRS 9 using the amortised cost method. The long-term loans provided to licensees have 20-year terms and are only repayable at the end of the term and therefore in substance, are more akin to investments. The average interest rate is 6.1%.

Share based payments

In the years ended 31 March 2024 and 31 March 2023, the Group operated three equity share based payment plans. Management have formed a judgement on the vesting period over which the associated charge should be spread. This has been formed with reference to the individual conditionality associated with the different classes of share awards and ranges between one to three years from the date of the statement of financial position.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Calculation of expected loss allowance for related party loans

When measuring expected credit loss ("ECL"), the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions for the licensee business.

The Group assesses each licensee individually as to the probability of default on their loans based on their cash balances and their ability to pay the cash flows due.

Also, the Group has elected to calculate an additional portfolio expected loss provision in which the historical loss rates are adjusted for current and forward-looking information on macroeconomic factors affecting the Group's licensees. The Group has identified the changing insolvency rates in the UK as the key macroeconomic factor as the failure of corporates is deemed to be a reasonable macroeconomic predictor for the likely failure of a licensee business on a portfolio basis.

4. Revenue

The disclosure of revenue by product line is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8 (see Note 5).

Disaggregation of revenue

	2024	2023
	£'000	£'000
External revenue by product line
Licence Fee Income	2,183	2,549
Profit Share Income	128	165
Total	2,311	2,714

A further breakdown of revenue by reporting line is shown below:

	2024	2023
	£'000	£'000
External revenue by reporting line
Licence fees attributable to Mergers & Acquisition ('M&A')	1,475	1,817
Licence fees attributable to Other	708	732
Profit share attributable to M&A	119	165
Profit share attributable to Other	9	-
Total Revenue	2,311	2,714

5. Operating segments

Products and services from which reportable segments derive their revenues

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Marker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group's Chief Executive.

The Group has four reporting lines, identified above, which divide licence fees and profit share income between those attributable to M&A and Other, but the Group only has one operating segment due to the nature of services provided across the whole Group being the same, being revenue derived from licensing of the Dow Schofield Watts brand and associated brand names for use in the professional services sector. The Group's revenues, costs, assets, liabilities and cash flows are therefore totally attributable to this reporting segment.

Internal management reports are reviewed by the Directors monthly, including revenue information by licensee. Such revenue information alone does not constitute sufficient information upon which to base resource allocation decisions.

Performance of the segment is assessed based on revenue data only.

As the Group only has one reportable segment, all segmented information is provided by the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cash flows.

Geographical information

The Group has operations in one geographic location, the United Kingdom, and therefore the Group only has one reporting geographic operating segment. This is in line with internal reporting.

Information about major customers

Included in revenues arising from Licence fees attributable to M&A are revenues of approximately £0.40m (2023: £0.68m) which arose from licence fee income from the Group's largest licensee. Only one other single licensee contributed 10 per cent or more to the Group's revenue in 2024 (none in 2023).

6.Profit for the year

Profit for the year has been arrived at after charging/(crediting):

	2024	2023
	£'000	£'000
Depreciation of property, plant and equipment	144	139
Amortisation	59	46
Employee pension	25	14
Expected credit loss - licence fees	(7)	130
Expected credit loss - outstanding loans	130	22
Expected credit loss - profit share	(3)	(84)

7. Auditors' remuneration

	2024	2023
	£'000	£'000
Audit of the Group financial statements	66	63
Fees payable to the Company's auditors in respect of:
Accountancy services	2	-
Total auditors' remuneration	68	63

Non-audit services relate to iXBRL conversion work performed on the company's financial statements for corporation tax purposes.

8. Staff costs

The average number of persons employed by the Group (including Directors) during the year, analysed by category was as follows:

	2024	2023
	Number	Number
Central Heads	15	15
	15	15

Their aggregate remuneration comprised:

	2024	2023
	£'000	£'000
Wages and salaries	881	790
Social security costs	118	98
Other pension costs (see note 26)	25	14
	1,024	902

'Other pension costs' relate to the defined contribution plan charge as detailed in Note 26.

Aggregate Directors' remuneration

	2024	2023
	£'000	£'000
Wages and salaries	524	455
Social security costs	66	63
Other pension costs (see note 26)	18	8
	608	526

The highest paid Director's total emoluments in the year were £225,500 (2023: £213,500) of which £nil (2023: £nil) related to pension costs.

Directors' transactions

Dividends totalling £687,362 were paid in the year in respect of ordinary shares (2023: £1,260,953). Of the dividends, £182,099 (2023: £324,682) were paid to Directors of the Company who were currently serving at the time of payment. See Note 12 for details.

9. Finance income

	2024	2023
	£'000	£'000
Interest income:
Loan Interest	124	80
	124	80
Other finance income	112	24
Total finance income	236	104

10. Finance costs

	2024	2023
	£'000	£'000
Interest costs on lease	(18)	(19)
Other finance costs	(4)	(5)
	(22)	(24)

11. Income Tax

	2024	2023
	£'000	£'000
Corporation income tax:
Current year	135	260
Adjustments in respect of prior years	(19)	(25)
	116	235
Deferred tax (see note 21)
Origination and reversal of temporary differences	7	(5)
	123	230

The standard rate of corporation tax applied to reported profit is 25% (2023: 19%).

The charge for the year can be reconciled to the profit before tax as follows:

	2024	2023
	£'000	£'000
Profit before tax on continuing operations	207	715
Tax at the UK corporation tax rate of 25% (2023: 19%)	52	136
Tax effect of expenses that are not deductible in determining taxable profit and reversal of prior year expenses not deducted previously	5	(14)
Depreciation in excess of capital allowances	-	7
Other tax effects	12	4
Tax effect of adjustments in relation to prior periods	(19)	(25)
Tax effect of income not taxable in determining taxable profit	(9)	(5)
Movement in deferred tax assets/liabilities	7	(5)
Tax effect of share based payment adjustment	75	132
Tax expense for the year	123	230

From 1 April 2023, there is no longer a single corporation tax rate for non-ring-fenced profits. At the spring budget 2021, the government announced that the corporation tax rate for non-ring-fenced profits would increase to 25% for profits above £250k. Companies with profits between £50,000 and £250,000 pay tax at the main rate, reduced by a marginal relief.

12. Dividends

	2024	2023
Amounts recognised as distributions to equity holders in the year: Dividend for the year to 31 March 2023 consisting of:	£'000	£'000
Interim catch up dividend for the year to 31 March 2022 of £0.0056 per share	-	118
Final dividend for the year to 31 March 2023 of £0.02 per share (2022: £0.0366 per share)	421	772
Interim dividend for the year to 31 March 2024 of £0.0125 per share (2023: £0.0176 per share)	266	371
	687	1,261
Final dividend for the year to 31 March 2024 of £0.0075 per share (2023: £0.02 per share)	164	439
	164	439

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The dividend record date is 13 September 2024 and the dividend payment date is 27 September 2024. The ex-dividend date is 12 September 2024.

13. Earnings per share

From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

	2024		2023
Earnings	£'000		£'000
Earnings for the purposes of basic earnings per share being net profit attributable to owners of the Company	84		485
Effect of dilutive potential ordinary shares:	-		-
Earnings for the purposes of diluted earnings per share	84		485

		2024		2023
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		21,158,039		21,075,581
Effect of dilutive potential ordinary shares:
Share Options		768,321		674,454
Weighted average number of ordinary shares for the purposes of diluted earnings per share		21,926,360		21,750,035

From continuing operations

	2024	2023
Earnings	£	£
Basic earnings per share	0.004	0.02
Diluted earnings per share	0.004	0.02

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:

		2024	2023
		£'000	£'000
Profit after tax on continuing operations		84	485
Adjusted for:
Share-based payment expense		299	694
Adjusted earnings for the purposes of adjusted basic and adjusted diluted earnings per share		383	1,179

	2024		2023
Earnings	£		£
Adjusted basic earnings per share	0.02		0.06
Adjusted diluted earnings per share	0.02		0.05

Tax adjustments of £nil (2023: £nil) have been made in arriving at the adjusted earnings per share. This is based on an estimated full year equivalent tax rate, which is largely driven by the UK corporation tax rate of 25% adjusted upwards to take into account the effect of non-deductible expenses.

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.

14. Intangible assets


		Intellectual Property & Trademarks
Group & Company:		£'000
Cost
At 1 April 2022		907
Additions		-
At 31 March 2023		907
Additions		7
Disposals		(49)
At 31 March 2024		865
Amortisation
At 1 April 2022		113
Charge for the year		46
At 31 March 2023		159
Charge for the year Disposals		59 (49)
At 31 March 2024		169
Carrying amount
At 31 March 2023		748
At 31 March 2024		696

All intangible assets relate to intellectual property on which licence fees are charged. £645k of the carrying amount as at 31 March 2024 (2023: £676k) relates to Camlee Group. Management have determined that the present value of future cashflows to be derived from the respective licence fee income is greater than the carrying amount and, as such, the intellectual property does not need to be impaired.

15. Property, plant and equipment - Group

	Right of Use Assets	Office Fixtures, Fittings & Equipment	Total
	£'000	£'000	£'000
Cost
At 1 April 2022	520	221	741
Additions	11	43	54
At 31 March 2023	531	264	795
Additions	24	43	67
At 31 March 2024	555	307	862
Accumulated depreciation
At 1 April 2022	52	164	216
Charge for the year	105	34	139
At 31 March 2023	157	198	355
Charge for the year	109	35	144
At 31 March 2024	266	233	499
Carrying amount
At 31 March 2023	374	66	440
At 31 March 2024	289	74	363

Company

	Right of Use Asset	Office Fixtures, Fittings & Equipment	Total
	£'000	£'000	£'000
Cost
At 1 April 2022	-	128	128
Additions	-	28	28
At 31 March 2023	-	156	156
Additions	16	35	51
At 31 March 2024	16	191	207
Accumulated depreciation
At 1 April 2022	-	89	89
Charge for the year	-	27	27
At 31 March 2023	-	116	116
Charge for the year	1	26	27
At 31 March 2024	1	142	143
Carrying amount
At 31 March 2023	-	40	40
At 31 March 2024	15	49	64

16. Associates

As none of the individual associates are deemed to be material associates, they have been grouped together in aggregate below.

Aggregate information of associates that are not individually material


	2024	2023
	£'000	£'000
The Group's share of profit from continuing operations	120	284
The Group's share of profit and total comprehensive income	120	284

Change in the Group's ownership interest in an associate

Where the Company is a member of a licensee's business, a profit share arrangement is in place which entitles the Company to profits over a contractual threshold which is stated within an LLP agreement. The Group accounts for associates based on their economic share as stated in the legal agreements, rather than based on the Company's voting rights. Therefore, the accounting always mirrors the economic arrangement. When there is a change in profit share, this is not deemed to constitute a change in the Group's ownership interest in an associate as this relates to a change in economic interest only, hence there is no change to the equity accounting basis. A change in the Group's ownership interest therefore is only recognised where there is a change in the Company's voting rights.

17. Jointly controlled entities

The jointly controlled entity is not deemed to be a material jointly controlled entity.

Information of jointly controlled entity that is not individually material


	2024	2023
	£'000	£'000
The Group's share of profit from continuing operations	56	25
The Group's share of profit and total comprehensive income	56	25

18. Investments - Group and Company

		As restated
	2024	2023
	£'000	£'000
Financial assets measured under the equity method
Investment in Associates	145	209
Investment in jointly controlled entities	21	39
Financial assets measured at amortised cost
Other investments	1,499	1,025
Total Investments	1,665	1,273

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.

The prior year Investments balance has been restated in the current year due to an error that occurred in the calculation of the loans' present value on initial recognition resulting in a balance sheet reclassification. This has been corrected in the current year. For full details of the prior period adjustment please refer to Note 29.

The movement in Investment in Associates and Investment in jointly controlled entities is included in the cashflow statement as increase in amounts due from associates.

19. Trade and other receivables

		As restated		As restated
	Company 2024	Company 2023	Group 2024	Group 2023
	£'000	£'000	£'000	£'000
Trade receivables	893	910	914	965
Loss allowance	(75)	(41)	(75)	(41)
	818	869	839	924
Other receivables	1,346	804	1,346	805
Loss Allowance	(368)	(238)	(368)	(238)
	978	566	978	567
Prepayments and Accrued Income	1,194	368	1,260	425
Loss Allowance	(8)	(12)	(8)	(12)
	1,186	356	1,252	413
	2,982	1,791	3,069	1,904
Amounts due from subsidiary undertakings	130	130	-	-
	3,112	1,921	3,069	1,904

Included in prepayments and accrued income for both the company and the group are contract assets amounting to £800k (2023: £69k) 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 and contract assets as detailed below. Amounts due from subsidiary undertakings, in other receivables on the company statement of financial position, are interest free and repayable on demand and have been classified as due in greater than one year.

Contract Assets

Amounts relating to contract assets, which are disclosed within prepayments and accrued income above, are balances that can be classified as incremental costs of obtaining a revenue contract. These include the breakout incentives which provide businesses with an initial free-cash injection, as well as the below-market element of loans offered to licensee businesses.

Amortisation is recognised on a straight-line basis over the life of the contract. The average remaining length of contract to which these assets relate is 22 years. In the year ended 31 March 2024, amortisation amounting to £14k was recognised within admin expenses (year ended 31 March 2023: £9k was recognised in admin expenses).

	2024	As restated 2023
	£'000	£'000
Contract assets
Breakout Incentives	369	-
Below Market Element of Loans to Licensees	438	72
	807	72

Current	24	3
Non-Current	783	69
Total Investments	807	72

As discussed in Note 2, the Group uses the discounted cashflow valuation technique to measure the fair value of the contract assets that are not traded in an active market. However, in accordance with IFRS 13 and IFRS 9, the fair value of an instrument at inception is generally the transaction price. If the transaction price differs from the amount determined at inception using the valuation technique, that difference is capitalised in prepayments and accrued income. The differences yet to be recognised in profit or loss are as follows:

	2024	As restated 2023
	£'000	£'000
Balance at the beginning of the year	72	184
New transactions	713	-
Restatement (Note 29)	28	(103)
Amounts recognised in P&L	(6)	(9)
Balance at the end of the year	807	72

For details of the prior period adjustment please refer to Note 29.

Trade receivables

The Group assessed each licensee individually as to their probability of default based on previous credit loss history which is adjusted for current and forward-looking information. It is not appropriate to group the licensee trade receivable balances as there are specific circumstances associated with each business, notably, service line, sector, location and maturity of the business.

Average Credit Period taken is 131 days (2023: 102 days) and no interest has been charged on the receivables.

The ageing of trade receivables net of the loss allowance at the reporting date was as follows:

	2024	2023
	£'000	£'000
Not past due	580	772
Past due 61 to 90 days	32	7
Past due 91 to 120 days	95	53
Past due over 120 days	132	92
	839	924

The provision for impairment of trade receivables is the difference between the carrying value and the present value of the expected proceeds. The Directors consider that the carrying value of trade receivables approximates to fair value.

20. Borrowings

Analysis of changes in net debt

	01 April 2022	Cash flow	Other non-cash changes	31 March 2023
Cash & bank balances	4,722	(215)	-	4,584
Lease Liability	(385)	77	(3)	(311)

Net Debt	4,337	(138)	(3)	4,273
	01 April 2023	Cash flow	Other non-cash changes	31 March 2024
Cash & bank balances	4,584	(1,952)	-	2,632
Lease Liability	(311)	113	(173)	(371)

Net Debt	4,273	(1,839)	(173)	2,261

Balances at 31 March 2024 comprise:

		Current assets
		£'000
Cash and bank balances		2,632

21. Deferred tax - Group and Company

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.

	2024	2023
	£'000	£'000
At the beginning of the year asset	9	4
Charged in the year	(7)	5
At the end of the year asset	2	9

22. Trade and other payables

	Company 2024	Company 2023	Group 2024	Group 2023
	£'000	£'000	£'000	£'000
Trade payables	81	32	192	162
Other taxation and social security	166	210	179	211
Other payables	83	76	84	76
Accruals and Deferred Income	85	128	94	133
Corporation Tax	-	95	-	95
	415	541	549	677

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Amounts falling due in greater than one year include:

	Company 2024	Company 2023	2024 Group	2023 Group
	£'000	£'000	£'000	£'000
Dilapidation provision	1	-	80	75
	1	-	80	75

The dilapidation provision relates to the estimated cost of returning a leased property to its original state at the end of the lease in accordance with the lease terms. The average lease term remaining is 2.75 years.

23. Share capital - Group and Company

	2024		2023
	Number	£'000	Number	£'000
Authorised, issued and fully paid:
Ordinary shares	21,926,360	55	21,926,360	55
	21,926,360	55	21,926,360	55

	2023
	Number	£'000
As at 31 March 2023	21,926,360	55
Share issue	-	-
As at 31 March 2024	21,926,360	55

24. Leases

DSW Services, a subsidiary of DSW Capital PLC, entered into a formal lease arrangement for the Daresbury office, effective from 1 October 2021. Further detail on the lease accounting policy can be found in note 2.

During the current year, DSW Capital PLC entered into a lease agreement for a London-based office space, effective from 8 February 2024. The majority of the leased office space has been sub-let by DSW Capital PLC, with both the lease and sub-lease due to expire after 3 years.

The consolidated statement of financial position and consolidated statement of comprehensive income show the following amounts relating to leases:

Right-of-use assets	Company		Group
	£'000		£'000
Balance at 1 April 2022			468
Additions in the year	-		11
Depreciation	-		(105)
Balance at 31 March 2023	-		374
Additions in the year	16		24
Depreciation	(1)		(109)
Balance at 31 March 2024	15		289

Lease liabilities	Company		Group
	£'000		£'000
Balance at 1 April 2022	-		385
New leases recognised in the year	-		11
Interest expense	-		19
Lease amounts invoiced and paid in the year	-		(77)
Lease amounts invoiced and included within creditors at 31 March 2023	-		(27)
Balance at 31 March 2023	-		311
New leases recognised in year	147		155
Interest expense	2		18
Lease amounts invoiced and paid in the year	(4)		(113)
Lease amounts invoiced and included within creditors at 31 March 2024	-		-
Balance at 31 March 2024	145		371

Income Statement		Company 2024	Company 2023	Group 2024	Group 2023
		£'000	£'000	£'000	£'000
Interest expense (note 10)		2	-	18	19
Expense relating to leases of low-value assets		8	10	9	10
Expense relating to short-term leases		63	63	63	63
		73	73	90	92

As at the 31 March 2024, the Group recognised lease liabilities in respect of outstanding commitments for future minimum lease payments under non-cancellable lease contracts, which fall due as follows:

	Company	Company	Group	Group
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Within one year	54	-	153	91
In one to two years	55	-	160	96
In two to three years	36	-	59	101
In three to four years	-	-	-	23
In over four years	-	-	-	-
	145	-	371	311

The total cash outflow in the year paid in respect of leases was £113,000 (2023: £76,800). Under the terms of the lease, £108,636 per annum is charged until the first break date in October 2026 on the Daresbury lease and £62,216 per annum is charged on the London office lease.

Leases as a lessor

During the year, the Group recognised interest income on lease receivables of £2k.

The total cash inflow in the year in respect of the sub lease was £5,000 (2023: £nil).

The group's finance lease arrangements do not include variable payments.

The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.

	2024	2023
Amounts receivable under finance leases:	£'000	£'000
Less than one year	59	-
In one to two years	56	-
In two to three years	35	-
Total undiscounted lease receivable	150	-
Unearned finance income	(19)	-
Net investment in the lease	131	-

Undiscounted lease payments analysed as:
Recoverable after 12 months	91	-
Recoverable within 12 months	59	-
	150	-
Net investment in the lease analysed as:
Recoverable after 12 months	82	-
Recoverable within 12 months	49	-
	131	-

25. Share-based payments

In the year ended 31 March 2024 the Group operated three equity-settled share-based payment plans as described below.

The Group recognised total expenses of £299,412 in respect of equity-settled share-based payment transactions in the year ended 31 March 2024.

The charge to the income statement is set out below:

Share plans:	2024	2023
Growth share plan	254,012	368,269
Legacy Awards	-	253,301
PSP Awards	45,400	72,217
Total SBP expense	299,412	693,787

Share-based payments movement for the year ended 31 March 2024:

	SBP Expense (£)	SBP Reserve (£)	Retained Earnings (£)
Growth share plan	254,012	(254,012)
Reserve transfer of growth shares		1,669,583	(1,669,583)
Legacy Awards	-	-
PSP Awards	45,400	(45,400)
Total movement	299,412	1,370,171	(1,669,583)

Share-based payments movement for the year ended 31 March 2023:

	SBP Expense (£)	SBP Reserve (£)
Growth share plan	368,269	(368,269)
Legacy Awards	253,301	(253,301)
PSP Awards	72,217	(72,217)
Total movement	693,787	(693,787)

Details of Directors' share awards are set out in the Directors' Remuneration report.

Growth Shares

DSW Capital implemented a Growth Share Plan in March 2021 for key members of its management team and a number of individuals within the licensees from which DSW receives licence fees.

Any value received for the Growth Shares was conditional on a future Exit event taking place and certain individual restrictions.

After the IPO, 214,308 C Growth Shares and 17,268 E Growth shares were converted to 1,150,548 ordinary shares in issue. 45,479 D Growth Shares were converted to Deferred Shares which were cancelled at the AGM in September 2022. The Group recognised total expenses of £254,012 related to the Growth Share Plan in the year ended 31 March 2024.

The Growth Shares have been valued using the Black-Scholes pricing model. Management have formed a judgement on the vesting period over which the associated charge should be spread. This has been formed with reference to the individual conditionality associated with the different classes of share awards and ranges between one to three years from the balance sheet date. During the year ended 31 March 2024, the Growth Shares vested, and the remaining expense has been recognised.

Since the Growth Shares have vested, the total share-based payments charge relating to the Growth Shares (£1,669k) has been reclassified from the Share-Based Payment Reserve to Retained Earnings.

Legacy Awards

Following the IPO in December 2021, a Legacy Award was awarded to be held by the Chief Financial Officer entitling them to 1.53% of the equity value in excess of £26m. The CFO Legacy Award was subject to continuing employment until 31 March 2023, with such awards vesting on 31 March 2023. Further, it was agreed that certain employees of Dow Schofield Watts CF Leeds were entitled to approximately 1.53% of equity value up to a maximum equity value of £26m (the "Leeds Legacy Awards"). To fulfil these obligations, those individuals would be granted options to acquire the interest below a £26m equity value in the same 1.53% shareholding that the CFO Legacy Award is granted over, similarly vesting on 31 March 2023.

Both the CFO Legacy Awards and the Leeds Legacy Awards vested on 31 March 2023. The Leeds Legacy Awards have subsequently been exercised in full whilst the CFO Legacy Awards have now lapsed. No further charge has been recognised in the year ended 31 March 2024.

PSP Awards

The Board recognises the importance of ensuring that members of the Group are effectively and appropriately incentivised and their interests aligned with those of DSW Capital. Similarly, the Board believes that the ongoing success of the DSW Network depends to a high degree on retaining and incentivising the performance of its key people.

To that end, the Group has adopted the Performance Share Plan ("PSP"), to align the interests of Executive Directors and key employees ("Participants") with those of the Shareholders. The PSP will be a long-term incentive plan which will form the primary long-term incentive arrangement for the Executive Directors. The Remuneration and Nominations Committee will consider the granting of PSP awards to the participants on an annual basis.

A summary of the structure of the rules of the Plan is set out below:

·	Annual awards will be determined by reference to a number of shares equal in value to a maximum of 200% of base salary of participants;
·	Grants shall be subject to a three-year vesting period (subject to the satisfaction of the performance conditions);
·	Following vesting, there will be a further 24 month holding period before participants are able to sell any Shares; and
·	Awards are subject to malus and clawback provisions.

Challenging performance conditions will be set for each award under the PSP. For the first awards, the Remuneration and Nominations Committee intends that the awards will vest based on relative total shareholder return ("TSR") targets against an applicable comparator group. The share price per award is £1.00 with an exercise price per award of nil.

Awards outstanding at 31 March 2024 are shown below:

	2024	2023
	No. of share options	No. of share options
Outstanding at beginning of year	512,185	95,000
Granted during the year	293,796	417,185
Forfeited during the year	(465,325)	-
Outstanding at the end of the year	340,656	512,185
Exercisable at the end of the year	-	-

There were no awards exercised or expired in the period. During the period to 31 March 2024, it was announced that Nicole Burstow would be leaving DSW Capital. As such, her PSP awards to date have been forfeited.

The Group used the Black Scholes Model to calculate the anticipated value of the PSP awards. The charge for the year is £45,400.

26. Retirement benefit plans

Defined contribution plans

The Group operates defined contribution retirement benefit plans for all qualifying employees.

The Group is required to contribute a specified percentage of payroll costs to the retirement benefit plan to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

The total expense recognised in profit or loss of £24,929 (2023: £14,274) represents contributions payable to these plans by the Group at rates specified in the rules of the plans. As at 31 March 2024 there was £2,494 (2023: £1,895) which had not been paid over to the plans and is included within creditors due in less than 1 year.

27. Financial Instruments

In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

The significant accounting policies regarding financial instruments are disclosed in Note 2. The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

Financial assets

	Held at amortised cost
	Company 2024	Company 2023	Group 2024	Group 2023
	£'000	£'000	£'000	£'000
Cash and cash equivalents	2,615	4,563	2,632	4,584
Trade and other receivables	2,733	1,637	2,624	1,563
	5,348	6,200	5,256	6,147

Financial Liabilities

	Held at amortised cost
	Company 2024	Company 2023	Group 2024	Group 2023
	£'000	£'000	£'000	£'000
Trade and other payables	249	236	370	371
	249	236	370	371

There is no significant difference between the fair value and carrying value of the financial instruments.

(a) Financial risk management objectives

The Board has overall responsibility for the oversight of the Group's risk management framework. A formal process for reviewing and managing risk in the business has been developed. A register of strategic and operational risk is maintained and reviewed by the Board, who also monitor the status of agreed actions to mitigate key risks. The Board's objective in managing financial risks is to ensure the long-term sustainability of the Group.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

(b) Credit risk management

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group's credit risk is primarily attributable to its startup loans provided to licensees. The Group mitigates this risk by encouraging ongoing engagement of senior management with network members and monthly reporting which allows close monitoring of emerging credit risks and facilitates early support and advice to mitigate or remediate performance.

Credit risk with cash and cash equivalents is reduced by placing funds with banks with high credit ratings.

(b)(i) Overview of the Group's exposure to credit risk

The Group recognises a loss allowance for expected credit losses on the Group's loans to licensees and trade receivables.

The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial asset. The expected loss rates for these financial assets are based on the Group's historical credit losses experienced over the three-year period prior to the period end.

An additional portfolio expected loss provision is calculated in which the historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. The Group has identified the changing insolvency rates in the UK as the key macroeconomic factor.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities and by continuously monitoring forecast and actual cash flows.

Network members in difficulty are asked to provide short-term cash flow forecasts on a monthly basis to support risk monitoring and potential funding requirements and Partners may be asked to reduce drawings on a temporary basis.

(c)(i) Liquidity and interest risk

There is no interest payable on trade payable balances and the operations of the Group are not dependent on the finance income received.

(c)(ii) Financing facilities

The Group is using the cash inflows from the financial assets to manage liquidity.

(d) Capital risk management

The Group considers its capital to comprise its ordinary share capital and retained profits as its equity capital. In managing its capital, the Group's primary objective is to provide return for its equity shareholders through capital growth and future dividend income.

The Group's policy is to seek to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs.

In making decisions to adjust its capital structure to achieve these aims, either through new share issues or the issue of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.

Details of the Group's capital are disclosed in the statement of changes in equity and Note 23.

28. Events after the reporting period

Since the year end the Directors have recommended the payment of a final ordinary dividend of £0.0075 per share for the year ended 31 March 2024.

29. Prior period adjustment

During the year ended 31 March 2020, the company issued a loan to Newco Limited amounting to £1,125k with a 20-year term as part of a management buyout agreement with Camlee Group. The loan, issued at below-market interest rate, was classified as an investment measured at amortised cost in the financial statements. However, a classification error in calculating the fair value of the loan on initial recognition led to the overstatement of the day one loss in prepayments and accrued income by £104k and an understatement of the investments balance by the same amount. Management have corrected this by reclassifying the amount between the two restating the prior year comparatives accordingly.

Due to the initial £104k overstatement, this also resulted in an understatement of Interest Income by £7k and an overstatement of amortisation by £21k. Management have evaluated that the total impact of this error on the previous periods' profit and loss is £28k, which is immaterial.

Consequently, the retained earnings balance has not been restated, and the full adjustment was recognised in the current year's profit and loss.

Since the only material restatement pertains to the reclassification between investments and prepayments and accrued income balances, management has opted to correct the error in year ended 31 March 2023. A third statement of financial position, as at the beginning of the earliest comparative period (year ended 31 March 2022), has not been presented as both the restatement of £104k and the adjusted balances would be the same as the position as at 31 March 2023.

30. Related party transactions

Balances and transactions between the Company and its subsidiary, 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.

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 shareholders.

	2024	2023
	Revenue and Cost Recharges	Revenue and Cost Recharges
	£'000	£'000
PHD Industrial Holdings	202	252
DSW Investments 2 LLP	(107)	(104)
Other investments	592	684
Totals	687	832

Other investments relate to routine and similar transactions which arose in the ordinary course of business, with DSW CF Leeds, DSW TS Leeds and DSW Business Recovery.

Amounts due from/to related parties

Group entities had the following balances, including loans to related parties, outstanding at year end with related parties who are not members of the Group:

	2024	2023
	Amounts due from related parties	Amounts due from related parties
	£'000	£'000
DSW Investments 2 LLP	(34)	(33)
Other investments	237	277
Totals	203	244

Salary and fees payable to James Dow and Jon Schofield are as disclosed in the Remuneration and Nominations Committee Report. Salary totalling £43,340 (2023: £41,300) has been paid to Susie Dow in the year.

Remuneration of key management personnel

The remuneration of the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS.

	2024	2023
	£'000	£'000
Wages and salaries	621	540
Social security costs	77	74
Other pension costs (see note 26)	20	9
	718	623

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