DSW Capital FY adjusted pre-tax profits fall

DSW said network revenues were pegged to be £16.0m, down from £18.3m in the prior year, reflecting subdued mergers and acquisition activity that has persisted since late 2021. Adjusted pre-tax profits were expected to have fallen by £900,000 to £500,000, below the bottom end of guidance provided in its February trading update and due to its decision to increase provisions against balances owed by licensees.

M&A activity represented 68% of network revenues, with average revenue per fee earner falling from £193,000 to £153,000. Fee earners increased from 97 to 107, while the number of partners grew from 42 to 50.

DSW said it remains confident in its long-term prospects but acknowledged "the suppressed earnings" in the period by proposing a reduced final dividend of 0.75p, giving a total dividend for FY24 of 2.0p. It anticipates maintaining dividends at a reduced level until market conditions improve and earnings return to growth.

Chief executive James Dow said: "We remain frustrated that economic conditions continue to impact confidence in the SME M&A marketplace. However, our licensee businesses have shown remarkable resilience and entrepreneurship and, as a result, we have only seen a 10% reduction in network revenue.

"The group remains well positioned to continue growing its network and to capitalise on future upturns in SME and M&A activity."

As of 1100 BST, DSW shares were up 1.50% at 50.75p.

Reporting by Iain Gilbert at Sharecast.com