Friday Takeaway from UK Small Caps
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
5th December 2025
Alphabetically arranged
Share prices and market capitalisations taken from Alpha Terminal from the current price on the day of publication.
Top three shareholders are taken from the websites of the companies that we are writing about, unless there is a more up to date TR-1 notification RNS announcement.
Acquisitions enhancing prospects at these service companies
DSW A Scaling Business
NAR Networked Distribution
DSW Capital 52.50p £12.57m (DSW.L)
Financial Calendar:
Year End March, Reported 8th July, Interims to September, reported 24 November
Top Three Shareholders:
James Dow (Director) & Beverley Dow 16.95%, Nils Christiansen & Daphne Robertson 12.75%, Mark Watts & Julie Watts 11.90%
Key Investment Points:
Scalable Platform, Cash Generative, Profit Share
The mid-market professional services platform which owns the Dow Schofield Watts and the DR Solicitors brands, reported strong Interims to September 2025, on 24 November. The scalable branded platform is aimed at ambitious, entrepreneurial professionals to start and develop their own businesses.
Founded in 2002 as an advisory platform to attract UK owner managers, the Company has consultants on fee-based income and a partnership model with a profit share approach. The breadth of the advisory services is designed to create, protect and realise value at pivotal points in the business cycle. The services encompass Deal to Debt, Tax to Transactions and International M&A to Legal and are tailored to deliver the client added value.
Interim Revenue increased by 32% to £10.3m, driven by the acquisition of DR Solicitors, and growth of the high margin licensee businesses increasing from £1.1m to £2.2m. The EBITDA jumped from £0.1m to £0.7m, as it is a scalable model on a fixed cost base. The interims showed a 134% rise in PBT to £237k from £1o1k. There was a 29% increase in the number of Fee Earners to 144 and of these 49 are partners in 24 businesses which should support continued revenue growth. The net cash balance was £2.24m, after repaying a £1m loan but still allowing for a 20% increase in the interim dividend to 1.2p that is paid to shareholders on the register on 12 December.
The Company is building a resilient and diversified group of licensee (regulated) professional businesses organically and by acquisition. This is demonstrated by the last acquisition of DR Solicitors which was completed in November 2024, as it reduced the dependency on volatile M&A activity that now accounts for 32% of revenue compared to 67%.
Profits are historically H2 weighted due to the timing of profit share income recognition and heightened M&A activity ahead of the tax year-end. The operationally leveraged earnings consensus on Alpha Terminal to April 2026 is for a 76% increase in PBT to £2.4m, turnover of £7.5m, an EPS of 6.9p, and a 10% increase in dividend to 3.3p. This we calculate gives a prospective P/E of 7.6x and a 6.3% yield.
Hybridan Comment: The broad range of services and the high dividend yield should reward patience.
Northamber 32.00p £8.68m (NAR.L)
Financial Calendar:
Year End June, Reported 21 November 2024, Interims to December, 27 March 2025
Three Main Shareholders:
Alexander Michael Phillips (Director) 62.58%, Worsley Investors 6.08%, Herald Investment Management 4.59%
Key Investment Points:
Low-cost acquisition, Increasing Margins, Supply Chain Security
Northamber’s strategy is to build a high-margin distributor of technology products and components and this has been significantly enhanced with recent acquisitions. The Interims to December 2024 reported that the B2B distribution of higher margin Audio Visual (AV), Cyber Security, and Network Infrastructure products had grown to 80% of sales as a result of two relatively small acquisitions - Tempura Communications in April 2024 and Renaissance Contingency Services in July 2024. The Finals to June 2025 are due this month.
On 1 December, a larger acquisition was made of Nuvias UK Hardware (NUC) - a specialist Unified Communications (UC) equipment distributor business - for up to £7.1m. NUC’s turnover for the 12 months to October was £28.8m, the GP margin was 11%, the gross profit was £3.2m and its net assets were £5m. UC hardware is video collaboration systems, enterprise voice solutions, and related UC endpoints, distributed to more than 700 UK customers, including enterprise, mid-market, public-sector, service-provider and specialist AV/ UC partners. The initial payment was £1.7m, with a further £5.4m for stock, subject to a stock check. Assuming the stock is valued at the lower of cost or the net realisable value, it seems an astute deal. The balance of the outstanding amount will be paid in agreed instalments with the final payment on 15 January 2028. This should give plenty of time to improve margins with synergistic cost and purchasing integration, while enhancing the combined technical capability, particularly in solution design, provisioning, configuration and UC deployment support.
The Interims to December 2025 reported a 9.9% increase in revenue to £32.1m, of which £8.7m arose from the two smaller acquisitions. More importantly, gross profits increased 27.5% to £5.1m, with a GP margin of 16.1%, up from 14.0% in the prior year. The loss before tax increased to £598k from £413k, reflecting integration costs of the two smaller acquisitions and administration costs are expected to continue to reduce. June’s cash reserves were £2.6m which is marginally up from £2.5m in the prior year, with Net Assets at £21.7m, including two unencumbered freehold properties, for a NAV per share of 79.8p which is significantly higher than the share price.
As the value adding, higher margin, technical supply chain acquisition strategy is implemented, the cross-selling opportunities are already beginning to materialise, with new territories and vendors, and further benefits expected.
Hybridan Comment: The Finals to June 2025 are likely to show an improving trend on key metrics, and the latest acquisition seems set to accelerate growth in 2026.
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