Acquisition, Issue of Equity, RCF, and TVR

Issue of Equity

Revolving Credit Facility,

and

Total Voting Rights

DSW Capital, a profitable, mid-market, challenger professional services licence network and owner of the Dow Schofield Watts brand, is pleased to announce that it has completed the significantly earnings-enhancing and transformational acquisition of DR Solicitors Limited ("DR Solicitors" or "DR") for a total consideration of £6.1 million (the "Acquisition").

Background to DR Solicitors

DR Solicitors is an award winning, nationally recognised law firm, which provides services to GPs, consultants and other primary care providers in the UK. Established by ex-Magic Circle lawyer Daphne Robertson and Nils Christiansen, DR operates on a platform model, employing eight staff at its head office in Guildford and distributing work across a growing network of consultant solicitors, which currently totals 18.

The healthcare sector is highly regulated, and DR Solicitors has a well-established and strong brand reputation in its key markets, resulting in high levels of repeat business and a loyal customer base.

In the financial year ended 31 March 2024, the business achieved organic revenue growth of 11% to generate revenue of £3.1 million and profit before tax of £1.2 million and, as at 31 March 2024, DR Solicitors had net assets of £1.6 million.

Co-founders Daphne Robertson and Nils Christiansen (the "Vendors") will continue to lead DR Solicitors post-Acquisition, collaborating with, and supported by, DSW Capital's experienced senior management team.

Acquisition rationale

The Acquisition brings a highly scalable, cash generative, and profitable Legal Platform to the Group.

Importantly, and in line with the Board's stated diversification strategy, the Acquisition materially reduces the Group's reliance on the cyclical SME M&A market from 68% of revenue to c.30%.

The cultural synergies between the two businesses are excellent, with DR Solicitors' strong, proven and committed management team sharing DSW Capital's vision and ambition.

DR Solicitors operates in the medical and dental markets, broadening the Group's offering whilst enabling DSW Capital to continue to enjoy its strong referral network in the other markets in which it operates.

The Acquisition is expected to be immediately and significantly earnings-enhancing and it is the board's intention to maintain the Group's progressive dividend policy.

Terms of the Acquisition

Under the terms of the Acquisition agreement, DSW Capital has paid a total consideration of £6.1 million, satisfied by £4.3 million in cash and £1.8 million of new ordinary shares of £0.0025 each in DSW Capital ("Consideration Shares"). The parent company of DR Solicitors is DR Services Holdings Limited ("DRSH" or the "Vendor"), a company registered in England & Wales, owned and controlled by Daphne Robertson and Nils Christiansen. DRSH has entered into a lock-in agreement with DSW, pursuant to which it will not dispose of any of the Consideration Shares for a period of two years to 1 November 2026.

The cash consideration is being funded from the Group's cash reserves and a new £3 million revolving credit facility (the "RCF"), further details of which are set out below.

Summary of the RCF

DSW Capital entered into the RCF with OakNorth Bank plc on 31 October 2024. The RCF is for an initial 3-year term until 31 October 2027. The facility is for £3 million, and the Company has drawn down the full amount to help fund the Acquisition. The RCF carries an interest rate of 4.5% above the Bank of England base rate and is subject to standard leverage and interest cover covenants.

Issue of the Consideration Shares and Total Voting Rights

Application will be made to the London Stock Exchange for the 3,204,748 Consideration Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will take place at 8.00am on 5 November 2024.

The Consideration Shares will rank pari passu in all respects with the existing ordinary shares of £0.0025 each in DSW Capital ("Ordinary Shares"), including the right to receive all dividends declared, made or paid after completion.

Following Admission, DSW Capital's total issued share capital will comprise 25,131,108 Ordinary Shares. This number may be used by shareholders in DSW Capital as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of DSW Capital under the FCA's Disclosure Guidance and Transparency Rules.

Following Admission, DRSH will hold an interest in 3,204,748 Ordinary Shares each, equal to approximately 12.75% of the enlarged issued share capital of DSW.

James Dow, Chief Executive Officer of DSW Capital, said:

"This is a game changing acquisition, and we are delighted to announce it to our stakeholders. Not only is it immediately and significantly earnings-enhancing, but it also diversifies our revenues, building resilience, and provides an opportunity to expand into new professional markets. Working with DR's inspirational management team, we believe we can accelerate the growth of the business using the strength of the Dow Schofield Watts brand, and resources and, over time, build a substantial platform of diversified, niche legal services.

"This is truly a meeting of minds. We are committed to supporting Daphne, Nils, and the DR team in the holistic growth and development of the business and welcome everyone warmly to Dow Schofield Watts."

Daphne Robertson, Founder and Senior Partner of DR Solicitors, added:

"We were one of the first legal firms to own a niche, one of the first to develop a consultant based operating model, one of the first to embrace alternative business structures, and now we are one of the first to integrate into a truly multi-disciplinary professional services group.

"The entrepreneurial culture of DSW Capital is a strong fit with our own, and this transaction will provide DR Solicitors with the scale and resources to continue building on our successful operating model for the benefit of all our clients. We are looking forward to this exciting next step, as we accelerate the growth of both our firm and the wider DSW group."

DSW Capital investor website