DSW Capital plc (DSW) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the DSW Capital plc Half Year Results Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from DSW Capital plc, Shru, Pete, good afternoon.

Good afternoon.

Good afternoon. Welcome, everybody. I'm Shru Morris, CEO of DSW Capital. Delighted to be here today. Thank you for joining. Just -- by way of background, I have been at DSW for just over a year. I'm a chartered accountant by trade. So I've worked professional services for over 20 years. I spent 7 years in practice, what was Baker Tilly now RSM and went on to hold senior roles in other professional services firms within law, construction and private equity-backed businesses. Most notably, I was Chief Executive of a large regional law firm, where I led the firm significant growth and change to success across the Northwest. I'm immensely proud to have taken over from our founder, James Dow, who led the business through success for over 20 years up until 1st of April 2025. So I'll just hand over to my colleague, Pete, to introduce himself.

Thanks, Shru. So I am Peter Fendall, the Chief Finance and Operating Officer for DSW Capital. I joined DSW just over 4 years ago just before our IPO. So I joined in September 2021, and we IPO-ed in December 2021. Before joining DSW, I spent 8 years at Deloitte, where I trained an audit and got my ACA qualification and then saw the opportunity at DSW to get involved just before the IPO. It was a bit of a batters on the fire for me, but a great opportunity and a fantastic journey. Since the IPO, I've been working with all of our licensees really to drive the value that they get in exchange for the license fee. So working on various initiatives across the business, including our Future Leaders program, generating that next generation of talent and the partners coming through in our individual licensee businesses, looking at things like our ESG strategy and also looking at ways that we implement new technologies across the group.

Okay. Thanks, Pete. So our vision is to absolutely empower ambitious professionals to start and grow their own business. We are very much challenger brand and our model gives those individuals the freedom to choose their destiny and shape their practice without the constraints of a traditional larger firm, but with all the benefits. So DSW was established over 20 years ago by 3 former Big 4 CF partners who built a very successful CF practice and a very strong brand in Dow Schofield Watts. And they thought there must be others out there who want to run their own business within professional services and set up the license model, which I'll talk about in a minute, to enable other professionals to start their own businesses. And we've been doing that for a number of years and for a number of partners and set up a number of businesses as well. Most recently, the business went on to acquire a legal platform, DR Solicitors in November 2024 to expand our offering to entrepreneurial legal teams as well and build on the consultancy model, which DR Solicitors set up over 20 years ago. So just to recap on the license model. So as I said, it's all about empowering pioneers and to build and grow their own businesses. So typically, I mean, we recruit sort of highly and quality talented individuals. And typically, we have 2 or 3 partners who come together. They set up a new LLP in high-margin sort of niche advisory services and corporate finance, tax, DD, et cetera, set up a new LLP. We provide them with the start-up funding. We underwrite their drawings. We provide them with back-office infrastructure and a very strong brand in Dow Schofield Watts. This structure really enables them to hit the ground running and focus on what they do best. In return to that, we have a license fee model, which is a percentage of their billings, which is about up to 22%. But effectively, they are free and have the autonomy to run their own business in the way that they want to run it. The key benefits of this model is around that freedom and autonomy. But for somebody who's perhaps in another firm, perhaps associate director level, director level, they can go on to significantly enhance their earnings potential by keeping that higher percentage of the billings of the work that they bring in themselves. And just to recap on the DR Solicitors model. Historically, that has been a consultancy model, and that's around individuals who are in, again, in larger law firms who want to do high-quality technical work but aren't necessarily rainmakers themselves. DR Solicitors actually win the work for those individuals, and they're effectively the sales engine and those consultants deliver the work in return for a fee share. Again, in some -- in many instances, they're able to have that freedom autonomy, but significantly enhance their earning potential as well. So this is really what the DSW platform looks like today, and it does represent a unique integrated professional services network spanning now across legal and financial advisory divisions. So you can see at the core of that, I guess, that platform is the brand, the Dow Schofield Watts brand. And we provide the infrastructure and the operational excellence to help those fee earners do what they do best. So we provide marketing support, finance, recruitment, technology, talent development and as I said before, start-up funding as well. The types of work that we currently have on our platform or the service lines that we have in our platform span across our legal divisions, so commercial property, litigation, disputes, commercial, corporate, primarily to the health care sector at the moment, but there are future opportunities to expand that as well. On the financial advisory side, we have deal advisory, so corporate finance, transaction services, debt advisory, investment, early stage and more mature businesses, tax and business recovery. So you can see from there, there's a lot of opportunities for cross referrals and the complementary service lines mean they can sometimes -- and joint client engagement and joint client arrangements as well. We also have -- obviously, DR Solicitors and it's a brand that we acquired in November 2024. And we also have the global Pandea network, which enables us to do cross-border transactions on the corporate finance side as well. So just to -- I guess, just to illustrate really our routes into DSW. And as I said earlier, the core of what DSW has done and the entrepreneurial spirit in which DSW is built is around that sort of start-up pathway. We help people launch their own businesses on the DSW platform. And we've now opened that up to the legal sector as well to try and encourage entrepreneurial legal teams who want to build their own business. Those businesses now go on to scale their business and start to employ their own staff as well, and that's really on the associate path. So we've got a number of businesses now, and Peter will talk about this in a minute, that have grown over the years, and we've helped them scale with the brand and the back-office infrastructure support behind them. We also invite established businesses to join the platform as well. So we've done this in a number of instances where established businesses either want an exit route for the founders or the shareholders, and they want to go on to and franchise the new management team and they want to scale up their business and thrive under the DSW platform. And that's our succession route. We also have DSW businesses that may go on to do that as well. And just to recap on the consultant model, that's through the DR side of the business where we've got consultants who deliver the work for the work that we generate for them. We've now opened up that model to consultants to bring their own work as well. So there is a home for their clients with the same back office and operational excellence that DR Solicitors offer them. A new initiative or a new pathway that we've launched this year is the Pathway to Partner and this is really to give people even more opportunities to help them start their own business. So again, if they -- if you're an individual in a professional services firm and don't quite have the confidence or feel you need more mentorship and technical guidance and softer skills guidance, Pathway to Partner is an employed role and is a program for up to 2 years, whereby we give you all the support, as I say, mentorship from some of our technical teams, mentorship by our talent development team to really get you ready for business ownership and give you the best chance of succeeding in that start-up phase. So what differentiates DSW, -- this is really around our investment thesis and we believe we've got a large market right for disruption. And now more than ever, professional services is changing, has changed a lot over the last 18 months. There are a number of professionals, which we feel there is an opportunity for them to join DSW. And also from a client side as well as the other professional services firms maybe are not servicing the middle-market clients as well as a partner-led service by our teams, there is a huge amount of opportunity for DSW. We've proven that we're a scalable and still continue to be an innovative platform model. We're probably one of the very few platform models that has both legal and financial advisory services as well. And we're starting to get that operational leverage. So we still have relatively low fixed costs. And obviously, we grow as our license fees grow and our businesses grow as well. That comes back to the strong growth in fee earners. So we've -- again, Pete will demonstrate how we've grown our fee earners since IPO, which is over about 15% in compound annual growth and we understand that, that really will help to build value in DSW and increase capacity and help us service more clients as well. We continue to be capital-light, and we've got high quality of earnings and we're less dependent on M&A now with the acquisition of DR, and we're incredibly cash generative, which we'll demonstrate in the figures later on. So we're very much an established scalable advisory platform now with a proven growth model. More importantly, we really are a premium brand offering autonomy, flexibility and earnings potential for our partners. So I'll just hand over to Pete now, who's going to talk about the sort of KPIs and the financials for DSW.

Thanks, Shru. So this slide basically sets out where we see the network today and gives you a bit of a feel for the scale of the overall DSW network. So we're currently at the end of the half year, we had 144 fee earners. Now if I look back to when we IPO-ed back in December 2021, we had around 82 fee earners. So in the time post-IPO, we have increased headcount by 62 heads, which is equivalent to 76% growth in that period. We've seen our partner numbers grow. So we're now at 49 partners at the end of September. That is a step which we saw grow quite significantly back in FY '24. And as those partners have begun to establish their business over the last 18 months, they have in turn begun to recruit the junior members within their team. And that is where we've seen the number -- the average number of fee earners per business has increased. So we're at 6 fee earners per business now. And again, if I look back to where we were when we IPO-ed, we were near the 3.2 fee earners per business. So really considerable growth. We see that growth as a bit of a lead indicator and a bit of a test of the market in terms of how our businesses feel they're performing and what their views are on the short- to medium-term future. But they tend to recruit a little bit late and therefore, when they are recruiting, they have confidence in the short- to medium-term pipeline. We've got 26 consultants as of the end of the period. So that's increased from 20 when we acquired DR back in November 2024. Again, with the DR consultants, there is an opportunity there for us to recruit more as the platform model is more known in the legal sector. However, our model is still very unique. We do generate the work for our consultants, as Shru mentioned before. So that means that we recruit when we have the work to continue to provide and feed the consultants what they need to -- what they'd like to deliver and reflect the earnings that they'd like to achieve. So again, it gives us that balance in terms of recruitment on the DR side. We have the capacity and the ability to recruit. But again, we've been focusing very much on the sales engine and making sure we have increased output and increased inflow of work coming into the business. That's reflective in our award nominations. We've worked very hard over the last 12 months with a new PR agency, which has gone really, really well. We're really delighted to have seen 36 award nominations in 2025, which is a record for us. And that's across many regions across the U.K. and lots of our different service lines have picked up those nominations. So again, we're seeing a lot of direct impact of the investment we've made in marketing and PR over the last 12 months. This slide just sets out some of our financial highlights. So top left, we have our network revenue. So that is the revenue from all of our licensees that they build out their clients and also the revenue from DR Solicitors as well, which is consolidated into our network revenue figure. DR Solicitors has obviously only been with us since November last year. So a large proportion of the growth that you're seeing in network revenue is a result of the fact we have DR Solicitors consolidated in there this year. However, if you strip DR Solicitors out, which represented about GBP 1.5 million of our network revenue, the underlying businesses had a like-for-like revenue growth of around 13%. So again, shows that real stability in the core DSW offering that we -- they've continued to grow, and that supports again that fee earner headcount growth we just talked about on the previous slide. If we then look at total income slide is the statutory revenue of the DSW Capital plc. That has grown by 156%, which is a bit of a nuanced figure because, obviously, you've got to remember that we have acquired DR Solicitors as a wholly owned subsidiary. So within that figure, we have the license income from our DSW licensees, but also the statutory revenue of the DR Solicitors subsidiary. So that's why you see the 156%. The other figure, which is really important to note is that like-for-like figure. So stripping out DR, we can see that there's been an 18% like-for-like increase in total income within DSW Capital. And that is more than the increase we've seen in the underlying businesses when it looks at a network revenue level. And the reason for that difference is the fact that our average effective license fee has remained at 14.5%, and that compares to 14.1% in the prior period. 14.5% was also the effective license fee for the end of FY '25. And therefore, we're particularly pleased that we've been able to maintain that license fee from the end of the financial year all the way through the half year, and we're reporting the same figure. And the reason that's important is because a component of our effective license fee is the profit share element that we get from some of our licensee businesses. The profit share element does not kick in until H2. So we've had no contribution from profit share in the first half of the year or very minimal contribution. And therefore, there is the potential for that license fee percentage to increase as we see out the rest of the second half of the year. LTM revenue per fee earner is around GBP 207,000 -- so that has increased from GBP 151,000 in the prior period, again, showing the increased utilization across the businesses, that growth we've seen and showing that the headcount that people have increased in their own businesses has started to return and generate more revenue across the board. We are slightly down on where we were at the end of FY '25, where we had 214,000 at the end of the financial year. And the reason for that is largely due to timing. So in terms of recruitment, obviously, we can see that we've got increased numbers from 136 at the end of the financial year to 144, 4 recruits in the DR Solicitors business, they did only join us in September. So their contribution to that revenue per fee earner figure has not yet been felt. That will obviously materialize in the second half of the year, which means we should be comfortable to keep our revenue per fee earner around that GBP 200,000 mark. Adjusted EBITDA is GBP 0.7 million for the period, and that is split between DSW GBP 0.3 million and DR Solicitors GBP 0.4 million. The GBP 0.3 million from DSW is comparable to the prior year where we generated GBP 0.1 million. So in the year, we've effectively tripled our adjusted EBITDA within the DSW underlying businesses. And now that has been achieved because of our fixed cost base. So when we've seen that revenue growth on the top line, that has begun to trickle straight down to the bottom line from an EBITDA perspective because we do not have variable costs on that side of the business. Our adjusted EBITDA margin is around 24.1%. And again, that is a significant improvement on FY '25 H1, which was 13.1% -- it is slightly down on FY '25, which was 38.3%. And the reason for that is the profit share element, as I mentioned before, that is a H2 item, so not in fact, not reflected in that 24.1% figure. But also in FY '25, as we reported at the end of the financial year, we saw a spike in revenue in October 2024 and is what we're calling the budget activity. That was a heightened period of M&A activity with a lot of deals being completed ahead of the budget last year, which drove activity levels up and gave us that approximately GBP 3 million additional contribution in network revenue. Obviously, since that budget activity, we've not seen M&A activity at the same level. We have seen it obviously stabilize at a more normalized level, which is again reflected in the results that we've seen and the growth that we're seeing in the underlying businesses. Operating cash conversion is around 133%. I'll talk to you a little bit more about that in a couple of slides where we have a good graph that illustrates how that's made up of. And then dividend per share. So we've declared a 1.2p dividend per share for the interims, and that compares to 1p last year. And that dividend gets paid out in January 2026. This slide just sets out the summary income statement. So I think the important point to make on this is that those 2 graphs on the top right-hand side around our revenue portfolio. A key part of our strategy since IPO has been to diversify our revenue stream away from M&A. It is our core business. However, obviously, it is very lumpy, and it has been under a lot of pressure over recent years with quite subdued M&A activity. We're obviously in a much better place now from an M&A activity perspective, and we've seen that constant trickle of deals being done over the period. But last year, we were 66% weighted towards M&A. We are now this year only 32% weighted towards M&A, and that is a result of the DR acquisition and growth in some of our underlying businesses as well. So you can see from that graph in H1 FY '26, DR Solicitors represents around 55% of the plc's income. So again, we are coming out of this financial year or coming out of this period, a far more resilient business and less dependent on M&A. It should be noted that M&A is obviously still a considerable part of the business. As I mentioned, it's where we started. It is a very high-margin area of the business as well with some lumpy revenue. So we are still slightly exposed on that, but far less than we were in the previous years. On the other things to note on the P&L, so cost of sales, that looks to be a new feature comparing September '25 to September '24. That is in relation to DR Solicitors and is purely the consultant fees attributable to the consultants, their time and what they get paid for the work that they do. Looking down at admin expenses. So that has increased within the period. That is solely in relation to the costs at DR Solicitors as the cost across the DSW business has remained broadly in line with the prior period. We've obviously within that, we have consolidated additional heads. So there's a team of 8 individuals down in Guildford who contributes to that figure. But also there's other costs in there around professional indemnity insurance, which is a new feature for the group because historically, our licensees have borne that cost, whereas now with DR, there is an element that we need to bear. And also, there's obviously costs in there around practice management systems and legal support and resources to support the legal services side and the consultants with their work. Looking at some of our performance highlights then. The top graph on the left-hand side is our network revenue. So you can see from FY '21 to FY '25, we saw around a 13.9% compound annual growth rate. This graph illustrates quite clearly the H2 weighting of our business. So in every single year, you can see that H2 has always been outperformed H1. The exception to that is FY '23, where we had the Liz Truss budget, which unfortunately destabilized M&A activity in the second half of FY '23. Things did recover slowly, as you can see. And if you look at FY '24, FY '25 and FY '26 and the H1 performance in each of those years, you can see that we've continued showing growth in our underlying businesses. Even in FY '26, if you strip out the GBP 1.5 million from DR Solicitors, that again still shows that trajectory of growth in the underlying businesses as well. So it's not all through acquisition. The graph top right is our number of fee earners. So since IPO, we've got a compound annual growth rate of around 15.5%. One thing to note is that whilst we've had some -- obviously, some lumpy revenues in relation to M&A activity over the period, we've continually been able to add heads on every single year. And that is because sometimes when the -- when there is subdued M&A activity, that is actually a driver for recruitment for us. So it enables us to be able to target those professionals at other firms where they're perhaps disappointed with the pay reviews or the lack of promotion. And therefore, they look for alternative models such as ours where you can really take control of your own career and work and take a direct cut of the billings that you are generating. As I said before, the average fee earner per business has grown over the years. So in the last 18 months alone, we've gone from 4.7 fee earners to 5.2 at the end of FY '25 and now 6 fee earners per business, again, showing that confidence our businesses have in the short- to medium-term outlook. Looking at the graph on the bottom right, you have operating cash conversion. So we show this in 2 different ways. We show this, first of all, just the pure operating cash conversion, which is taking into consideration loans to new businesses and new start-ups. So that is the gold line on that graph. You can see that in FY '24, that is when we saw a record number of new businesses and welcomed a record number of new partners. That led to about a GBP 700,000 outflow in terms of investment in new startup businesses. In FY '25, we've seen obviously those loans come back in and indeed in H1 of FY '26, which is why the operating cash conversion line goes up above 100% to around 113% at the end of FY '25 and now 133% at the end of H1 of FY '26. Stripping out those loan movements, the underlying operating cash conversion is hovering around 100% and it has done so since FY '23. And that enables us to have high levels of cash generation. So in H1 of FY '26, we generated GBP 898,000 of cash generated from operations, and that compares to an outflow in the prior period of GBP 179,000. What that has enabled us to do, it's enabled us to repay GBP 1 million of the RCF facility, which we secured to fund the acquisition of DR Solicitors. Now that was drawn down in full in November last year. And in June earlier this year, we repaid GBP 1 million of that. So we currently have GBP 2 million drawn down on the RCF facility. That gives us looking at the balance sheet, an overall net cash position of GBP 0.4 million. So we remain highly cash generative and in a good net cash position at the end of the period. I'll now pass back to Shru to take us through some of the opportunities for growth.

Thanks, Pete. So yes, we're really delighted with how the first half of the year has gone. So it's really what's next. And we want to build on that and build on some of the opportunities for growth in the medium term. So we fully appreciate that partner recruitment is the core of what DSW is about. So we have recruited a new Head of recruitment to help us on that journey really. So the first trend is really new licensees and trying to -- we want to continue with that vision of empowering professionals to set their own business up. And expanding that into legal services is key to us as well. So our recruitment drivers around both legal services and financial services to generate new licensees, which is a key strength of growth for us. Organic growth, this will very much come from our existing businesses scaling up, as we talked about before and have continued to do so over the last couple of years. And that consultant growth as well. So we've seen strong consultant growth in DR Solicitors and opening the platform up to consultants who bring their own work as well, again, is a good stream of revenue for us and expands our client base as well. Collaborations is a new area that we are starting to look at where we maybe don't have a service line, but a need for a client, we often refer that work outside of the network. And we do see an opportunity to collaborate or have partnerships with some of those organizations, areas such as wealth management. HR and in other areas where we maybe don't have the capacity or those service lines within DSW and trying to generate revenue whilst getting that referral into a trusted partner. Acquisitions, we will still look at acquisitions where they are a good strategic fit or a complementary service line over the next few years. And we will look at sort of straightforward acquisitions. But most typically, we do acquisition of license fees. So there have been a couple of examples of this, which I talked about on our succession pathway. This is where we may fund an MBO and an exit route for founders or shareholders. New management team comes in and their franchise to grow the business under the DSW platform in an area of strategic importance for us or a complementary service line or even a new geography in return for a license fee. And there are a number of opportunities in an alternative exit route for people who want to pass on the business to their management team as well. So we do see a lot of opportunities and build on the success of this year. Some of the service lines that we want -- we are focusing on are continue on the advisory work and that high-margin niche advisory work. We don't want to do audit and tax compliance and those sorts of areas. We want to do much more of the advisory work. Tax is a significant strategic priority for us as well. We've got a number of fee earners in Deal Advisory. We do a number of work across that, and we have relatively few fee earners in that area. Building on the health care sector that we have in DR Solicitors, we recently recruited a dental and pharmacy corporate legal team, which again helps us in that sales engine and that building on that health care brand within DR Solicitors. So there are particular areas of importance to us that we feel will complement the platform. So just to summarize, we're pleased with the -- we feel we've got resilient results in H1 FY '26. We're a much stronger, more resilient business. As Pete mentioned and I've mentioned as well, our dependency is less on M&A, but still remains an important part of what we do and an important part of our brand and some of those client success stories as well. But we've reduced that down to 1/3. We have much more touch points with clients within DR, so that mitigates our exposure to lumpy revenue as well. And we want to build on the opportunities with DR Solicitors as well and as I say, expand the health care proposition, attract new talent through the consultant model, both with delivery-only model, but also inviting consultants to bring their own work. And again, as I mentioned before, attracting entrepreneurial legal teams who want something different and want to shape their own practice as well. So our recruitment focus remains around building partners and helping people set their own businesses up. Pathway to Partner program is a really, really important initiative for us and will help us to attract professionals in the sort of ever-changing landscape at the moment. So we do remain cautiously optimistic in our FY '26 outlook, and there are still a number of market conditions that we need to be aware of and macroeconomic factors as well. But we want to balance our confidence with a prudent outlook. So I will hand over to -- we'll have some questions now. Thank you for listening.

[Operator Instructions] Just like to remind you that a recording of this present along with a copy of the slides and the published Q&A can all be accessed via your investor dashboards. Guys as you could see that we have received a number of questions throughout your presentation this afternoon. So if I may just ask you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Thank you. So first question we've got in is where would you ideally like to deploy capital in the next 12 months?

So probably comes back to the opportunities for growth. It's very much around continuing to help those teams set up their own business. So teams in the legal sector who want to have something different and join our legal platform, that would be where we give them start-up funding and as I say, all the back office support there. We really want to continue on supporting 2 or 3 licensees coming into the business this year. I'd also look at, as I say, complementary service lines and maybe an acquisition of license fee deal as well if it was in the right complementary service line. And as I mentioned before, areas like tax and employment law are of key strategic importance to us as well.

Thank you. So next one we've got is, given the recent news from Grant Thornton about their partner recruitment drive, how does this impact DSW, if at all?

So I think the phrase partner is probably becoming quite interchangeable depending on which firm you're at. So my view is a partner in Grant Thornton in today's world is probably quite different than being a partner in DSW. Often it can be akin to still being an employee and not really having your voice at the table or true equity in the business, which private equity has obviously may have shifted that somewhat. My view is it is a bit of an opportunity for us to recruit individuals who maybe want that different side of being a partner -- an equity partner, whereby they do make the decisions, they do have the freedom. They can act for the clients they want, and they can keep a significant percentage of their profits as well. So I think that it presents a bit of an opportunity for us if people want a different type of partnership.

Next one we've got is what is the H2 M&A pipeline trajectory looking like? And are you pursuing more DR style acquisitions? If so, how would you fund them?

Do you want to take this one?

Yes, I can do. So we're always in lots of dialogue with potential new licensees and potential new acquisitions as well. We obviously have made considerable cash generation in the first half of the year, enabling us to repay GBP 1 million of that facility that we have with our bank. We have an accordion facility on top of that of allowing us to draw down potentially up to GBP 2 million on top, which would enable us to fund a potential acquisition again. So they're very much on the pipeline, but we're looking for things that are very complementary to the network and will add value in terms of those synergies and those opportunities for cross referrals. So the next one we have is -- is the platform model scalable enough to support material international expansion? Or is the focus primarily U.K.-based?

It's something that we have thought about. And we have obviously an international network. So we can tap into some of the -- I guess, the opinions and feedback of whether or not this could work really. And I think it can because ultimately, we don't run those businesses for them. So the nuances internationally, we don't necessarily need to staff up for centrally. Obviously, from a scale perspective, we always have to look at our fixed cost and whether we can provide the service internationally. But I think it is actually an easier route to international expansion, again, especially because we've got the Pandea network and with relatively low fixed cost. So I think it is definitely scalable to do that.

Thank you. Next one we have is will AI dilute the services required by fee earners creating downward pressure on the fee percentage to remain competitive? So I think AI is an interesting one in terms of where we stand at the moment across both DSW and DR. So I think we're at a point where we have -- I'd like to see it as 25 individual businesses who are able to test obviously new AI and really find out what is the best out there in the market and implement it quite quickly. I think AI can have 2 roles. So there will be the ability to increase efficiencies within -- across the business, allowing us to potentially take on additional work, particularly on the DR side of things. But I also see it as a significant value enhancer in terms of being able to get to the answers far quicker for all of our clients and be able to deliver even more value and greater value. So I think there is the potential for some downward pressure on costs on the lower level admin less value-add parts of the service that some of our business provide, particularly in some of the transactions, there's some lower level elements of that, which I think we'll be able to speed up, but it will enable us to get to that value-add side. So I think in the round, I think we'll be -- we should be okay on that one. So the next question we have is, it seems DR Solicitors did around GBP 900,000 EBITDA since acquisition, 11 months contribution versus about GBP 1.2 million profit before tax in the 12 months to March -- 31st of March 2024. What's your view on the profitability of DR? And is there any seasonality in this business?

I'll maybe start. So the profitability of DR, I mean, does remain strong. And there are always pricing pressures with law firms that we come up against. But overall, because we have a consistent approach to retaining that fee share model, we've been able to maintain the profitability with, again, relatively low fixed costs. We have made some investment in technology, but that will only help with efficiency of that sort of central services team really. In terms of seasonality, really, it tends to circulate around the tax year-end or obviously any budget changes that may come through in terms of tax. So we tend to see a bit of a spike towards the end of the tax year, so 31st March deadlines where there are -- there does tend to be a lot more property transactions and things like that. But obviously, changes in legislation, that can lead to spikes as well. Changes in policy around primary care can again lead to wanting to transact on, particularly on property transactions, again, before the tax year-end. But it tends to be fairly stable and fairly normalized M&A. But yes, the tax year-end can sometimes lead to a bit of spike. Do you anything to add?

No, I think I'd just reiterate the investments, obviously, we just alluded to around -- particularly on technology and marketing. Those are 2 areas where we've seen as a small bit of investment and made a considerable impact on our ability to scale up and prepare the business for future growth. So that's where we've obviously focused some of our time as well in the last 12 to 18 months. And also the figures you -- in the question around 31st of March 2024, that is obviously pre-acquisition. And there are some post-acquisition costs that are obviously in the business as a result of the acquisition. So it looks like last question we have, any thoughts from today's budget?

We shouldn't do this on budget, should we. But yes, I mean, I think it seems to -- it doesn't seem to have had quite the impact on business that it did last year and obviously in the M&A space that everyone was waiting for a hiking capital gains. So it seems to be a few things and quite smaller things that have not quite impacted SME. It's a bit early to tell. I think my only observation would be is an opportunity perhaps for DR is around investing in [ GBP 250,000 ] neighborhoods, which is -- can lead to property work, can lead to incorporation. The devil is always in the detail, but it does present an opportunity both from a primary care and patient service point of view, but also from DR Solicitors advising on supporting our clients really.

Thanks, Shru. We've actually had a small flurry of questions coming as well, which is always good. So a question we've got here is, could you provide more color on how loans to licensees work, typical terms and payback period, et cetera? So typically, when we are speaking to a potential new licensee, we will work with them on building a business case for the DSW business. With that, we'll work out what their required funding facility is and how much they're going to need to get that off the ground and what their recruitment plans are. Typically, our average investment is around up to GBP 250,000 for a team. Those are usually interest-free loans for a period of 2 years. We see most of our businesses will pay those back within the 2-year period as there are some restrictions in place while those loans are outstanding on partner drawings. So typically, they come back well within that 2-year period, although there's always some exceptions. And then the next one we have is, would you consider reporting the churn in fee earners. So that is a stat which we're very happy with. We have a churn of around 15.5% in terms of just attrition rate and fee earners across the board. That is much lower than some of our peers in the Big 4, particularly. And again, it sort of reflects the quality experience that we have for both employees and partners here. So partners want to carry on because they generally earn much more than they do elsewhere as we've alluded to before. But then employees get that real experience like partner-led training and development. So again, we're very good at being able to keep our employees engaged. And then we have another final question here. Where do you see the business in 3 years?

So we're very excited about the medium-term prospects, and that's what I should say. I think we are -- as I said, we're a stronger platform now. And I think we'll be a much more -- even more recognized brand and that alternative -- credible alternative for professionals, both across legal and financial services to become equity partners in their own business. And I think for a number of years, we've been selling the concept. Now it's around driving that brand loyalty and that brand awareness that this is -- this works for people, and you can be very, very successful and do opt for the clients that you want to. I think just coming on to the clients, I think having a platform whereby clients can be serviced at every stage of their journey. So having those service lines where we have a number of joint client engagements, a number of cross referrals and much more recurring revenue in the business, which means, again, that the platform becomes more scalable. And as I say, the businesses can refer to each other and it becomes another compelling proposition for new businesses to come and join the platform. And the final thing I would say, I think the legal side of the business will become even stronger as we build on that DR and DR Solicitors' opportunity, not just on the consultancy side, but being that credible alternative for entrepreneurial talent.

Thanks. So I think that brings us to the end of questions.

Okay.

Sorry, guys, absolutely, if I may just jump back in there. Thank you very much indeed for being so generous of your time and addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Shru, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes. It's really just to say a big thank you for everyone taking time out to listen to us. We are excited about the business. We've got a really unique platform in DSW and a large market to go at. So -- and we really enjoy talking about as well. So thank you very much, and we're looking forward to the future.

Perfect, guys. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of management team of DSW Capital plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.