DSW Capital Final Results: Revenue Rises 27%, but Weaker M&A Activity Squeezes Profit

DSW Capital PLC has reported a mixed set of audited final results for the year ended 31 March 2026.

Revenue increased strongly, helped by the first full-year contribution from DR Solicitors. However, weaker merger and acquisition activity, particularly towards the end of the year, weighed on profit and margins.

The professional services group still generated plenty of cash, reduced its bank borrowing and increased the total dividend. Early FY27 trading has also been encouraging, although management remains cautious about geopolitical and economic uncertainty.

DSW Capital's key FY26 figures

Metric	FY26	FY25	Change
Revenue	£6.17 million	£4.86 million	Up 27%
Total income	£6.27 million	£4.97 million	Up 26%
Adjusted EBITDA	£1.67 million	£1.79 million	Down 7%
Adjusted profit before tax	£1.31 million	£1.57 million	Down 17%
Statutory profit before tax	£798,000	£1.30 million	Down 39%
Adjusted PBT margin	21.2%	32.4%	Down 11.2 percentage points
Cash generated from operations	£1.82 million	£2.03 million	Down 10%
Year-end cash	£2.03 million	£2.68 million	Down 24%
Total dividend per share	3.2p	3.0p	Increased

Adjusted figures remove items including share-based payments and the amortisation of intangible assets created through acquisition accounting. They can provide a clearer view of underlying trading, but the statutory numbers still matter because they capture the full reported cost of running the group.

The complete figures and accompanying notes are available in the original company announcement.

DR Solicitors is driving diversification

DSW operates a platform and licensing model that allows professional advisers to build businesses under its brands while receiving central support, infrastructure and funding.

The acquisition of DR Solicitors in November 2024 was designed to broaden the group beyond its historically important corporate finance activities. FY26 provides evidence that this strategy is working.

DR Solicitors delivered approximately 12% annualised revenue growth, while its consultant headcount increased by 48% to 31. The business also recruited a specialist corporate legal team focused on the dental and pharmacy sectors.

Most importantly, M&A activity now represents 31% of total income, compared with 55% in FY25. This should make DSW less exposed to swings in transaction volumes.

That shift proved useful during FY26. DSW said deal activity slowed sharply towards the end of the financial year amid the Iran conflict and wider economic uncertainty. Growth at DR Solicitors partially offset the impact.

Investors can compare this update with DSW's previous record results following the DR Solicitors acquisition.

Revenue growth did not translate into higher profit

The headline weakness is clear: revenue rose, but profit fell.

Adjusted EBITDA declined by 7% to £1.67 million, while adjusted profit before tax fell by 17% to £1.31 million. Statutory profit before tax dropped to £798,000 from £1.30 million.

The adjusted profit-before-tax margin fell from 32.4% to 21.2%. This reflects weaker M&A activity, a full year of DR Solicitors' cost base and continued investment in marketing, technology, operations and central support.

Administrative expenses increased from £3.18 million to £4.03 million. Statutory profitability was also affected by £341,000 of amortisation relating to acquired intangible assets and finance costs of £294,000.

FY25 was an unusually strong comparison period. It included £3.0 million of what management described as "supernormal" Network Revenue, as business owners completed transactions ahead of anticipated Budget changes.

Even so, the lower margin is worth watching. DSW now needs its investment in legal services and central infrastructure to produce enough growth to rebuild operational leverage.

Cash generation remains a major positive

Cash generation was arguably the strongest part of the results.

DSW generated £1.82 million from operations, equivalent to operating cash conversion of approximately 109%. Operating cash conversion compares cash generated from operations with adjusted EBITDA.

The group repaid £1.0 million of its £3.0 million OakNorth revolving credit facility and paid £788,000 in dividends during the year. It finished March with £2.03 million of cash, bank borrowings of £1.85 million and net cash of approximately £0.1 million.

Net assets were broadly unchanged at £9.95 million. However, £6.57 million of the group's assets were intangible assets, primarily goodwill and customer relationships arising from the DR Solicitors acquisition.

The accounts were prepared on a going concern basis, and DSW reported that it remained within its financial covenants during FY26. It also disclosed that debt-service covenants for June and September 2026 were waived to facilitate the Integer Advisory acquisition, with a temporary monthly minimum liquidity covenant of £2.5 million introduced for that period.

Dividend increases to 3.2p

The board has proposed a final dividend of 2.0p per share, unchanged from FY25. Combined with the 1.2p interim dividend, the total FY26 payout rises to 3.2p from 3.0p.

Subject to shareholder approval, the shares will trade ex-dividend on 10 September 2026. The record date is 11 September, with payment scheduled for 5 October.

The dividend increase is supported by strong cash conversion, although investors should remember that DSW is also funding platform investment and selective expansion.

DSW Legal provides the next growth opportunity

DSW has launched DSW Legal to recruit lawyers and legal teams beyond DR Solicitors' established healthcare specialism. The ambition is to build a nationwide legal platform using the same entrepreneurial model as the wider DSW network.

James Mallendar has been appointed managing director of both DR Solicitors and DSW Legal. The group is investing in sales, operations, IT and artificial intelligence tools to support onboarding, client delivery and recruitment.

After the year-end, an existing licensee acquired Integer Advisory with support from DSW Capital, adding public-sector advisory capability. A transaction services business in Southampton also joined the network in July 2026.

These additions could improve geographic and service-line diversification, but execution matters. Total fee-earner headcount was broadly flat at 135, while revenue per fee earner declined from £214,000 to £163,000 as transaction activity normalised.

What investors should watch in FY27

The new financial year has started encouragingly, with deal activity reportedly regaining momentum and trading in line with board expectations.

The most important indicators will be:

• whether the M&A pipeline converts into completed transactions;
• continued consultant recruitment and revenue growth at DR Solicitors;
• the pace and cost of scaling DSW Legal;
• recovery in group profit margins;
• cash generation after dividends and further investment; and
• compliance with banking and temporary liquidity requirements.

DSW is now more diversified and less dependent on corporate finance transactions than it was a year ago. That is meaningful strategic progress.

However, FY26 also shows that diversification has not removed earnings sensitivity altogether. Revenue growth was impressive, but lower productivity, investment costs and weak late-year deal flow reduced profit substantially.

The investment case now rests on whether DR Solicitors and DSW Legal can turn a broader revenue base into renewed profit growth without weakening the group's cash discipline.