Highlights

• DSW Capital paid a 1.2p interim and a 2.0p final, taking the ordinary total to 3.2p per share.

• Revenue rose 27% to £6.17 million, yet adjusted pre-tax profit fell 17% to £1.31 million.

• M&A income made up 31% of total income, down from 55%, as deal flow slowed late in the year.

• Lenders waived debt-service covenants for June and September 2026, adding a temporary £2.5 million minimum Liquidity test.

Advisers who run their own firms under a shared brand: that is the model at DSW Capital (LSE:DSW), which has now paid 16.18p in dividends since flotation, if the final is approved. This year, however, revenue grew while profit shrank, and the cash cushion got thinner. Here is how the 3.2p total holds together.

Two payments in the window

A 1.2p interim went ex on 11 December 2025 and was paid on 16 January 2026. A 2.0p final went ex on 10 September 2026 and was paid on 5 October. The total of 3.2p compares with 3.0p for the prior financial year and equals 6.74% of a share price of 47.5p. The quote spread is wide, at 45.00p to 50.00p, so the Yield is indicative. Cumulative dividends since the company listed reach 16.18p if the final is approved, and the board describes its policy as progressive.

Cover

No cover ratio is stated in the results. Adjusted Earnings Per Share were 4.0p against 5.0p, which covers the 3.2p total roughly 1.25 times. Statutory Basic Earnings Per Share were reported as £0.02, a rounded figure that points to cover below one on a statutory basis. Cash generated from operations was £1.82 million, about 109% of adjusted EBITDA, and dividends paid in the year were £0.8 million.

Results in brief

Revenue rose 27% to £6.17 million and total income to £6.27 million. Adjusted EBITDA slipped 7% to £1.67 million, adjusted pre-tax profit fell to £1.31 million from £1.57 million, and statutory pre-tax profit was £0.80 million against £1.30 million. Administrative expenses climbed from £3.18 million to £4.03 million, reflecting a full year of DR Solicitors, acquired in November 2024. Revenue per fee earner fell from £214,000 to £163,000 with headcount flat at 135.

Balance sheet

Cash was £2.03 million at year end, bank borrowings were £1.85 million, and net cash was about £0.1 million after £1.0 million was repaid on a £3.0 million revolving Credit facility. Net Assets were £9.95 million. Lenders waived the debt-service covenants for June and September 2026 and introduced a £2.5 million minimum monthly liquidity covenant for that period, to facilitate the Integer Advisory Acquisition by an existing licensee.

Business and risks

DSW operates a licensing network under the Dow Schofield Watts and DR Solicitors brands from 12 UK offices. M&A income dropped to 31% of total income from 55%, and deal flow slowed in the latter part of the year amid geopolitical and macroeconomic uncertainty. The founders of DR Solicitors left in July 2026. Management says the group is trading in line with board expectations, with deal activity regaining some momentum.

A licensing network explained

DSW Capital (LSE:DSW) operates through a licensing model in which independent advisers run their own businesses under shared brands, including Dow Schofield Watts and DR Solicitors. The group earns income from the licensees and from transactions they complete. This model can be efficient because costs are shared, but it also means that results depend on the activity of the network. When deal flow slows, as it did in the latter part of the year, M&A income falls and the profit Margin is squeezed.

Understanding adjusted and statutory profit

Adjusted profit removes certain items to show the underlying performance, while statutory profit includes everything required by accounting rules. Here, adjusted earnings per share of 4.0p cover the 3.2p Dividend about 1.25 times, whereas the statutory figure is lower. Investors should be aware of both measures and consider which is the better guide. A dividend that is covered only on an adjusted basis relies on the board's view of what counts as underlying.

Covenants and liquidity

A covenant is a condition in a Loan agreement that a company must meet, such as a minimum level of cash or a ratio of profit to Debt service. The waivers for June and September 2026 and the new £2.5 million liquidity test show that lenders are working with the company during a period of change. For LSE:DSW, meeting the new test will be as important as the dividend itself, and the progress of the Integer Advisory acquisition by an existing licensee is part of that picture.

What to watch next

The next steps are the interim results, any update on the covenant position and the board's decision on the next dividend. Investors should follow M&A income as a share of total income, the level of cash and the revenue per fee earner. If deal activity regains momentum, as management suggests, the dividend would be better supported.