Robust financial performance with strategy execution driving growth

Knights today announces its full year results for the year ended 30 April 2022.

Financial highlights

  • Revenue increased by 22% to £125.6m (2021: £103.2m)
    • Organic growth of 2%, held back by Omicron in the typically important fourth quarter
    • 20% revenue growth from acquisitions; a £14.8m increase in contribution from prior year acquisitions and £5.8m from in year acquisitions
  • Gross margins increased to 49.3% (2021: 48.9%)
  • Underlying PBT fell by 2% to £18.1m (2021: £18.4m), representing an underlying PBT margin of 14.4% (2021: 17.8%)
  • Underlying EPS decreased to 17.23p (2021: 18.30p). Basic EPS - loss of 3.02p (2021: profit of 4.14p)
  • Strong cash conversion of 109% (2021: 96%)
  • Lock up was 86 days (2021: 89 days excluding acquisitions), with continued improvement driven by strong culture and discipline of day-to-day cash collection across the Group
  • Net debt, excluding leases, of £28.9m (30 April 2021: £21.1m) after paying £18.0m of initial and deferred cash consideration for acquisitions
  • Proposed final dividend of 2.04p, giving a total dividend of 3.50p (FY 21: nil, FY 20: 1.10p)

Strategic and operational highlights

  • Continued to expand geographic presence, with acquisition strategy gaining momentum
    • Three acquisitions completed during the period, providing platforms for future organic growth
      • Keebles strengthened Knights' Yorkshire presence, complementing existing offices in Nottingham and Leeds
      • Archers provided entry into the North East, one of the largest markets for legal and professional services in the UK
      • Langleys established Knights as the leading firm in York and expanded its operations in the East of England, with entry into Lincoln
      • Acquisition pipeline remains strong, with acquisition of Coffin Mew completed post-period end adding four offices in the South of England, providing a new presence in Portsmouth, Southampton, Brighton and Newbury
    • Integration of newly acquired businesses is progressing well with performance in line with expectations, overseen by the growing Client Services Executive 

  • Strong employee retention and continued recruitment driven by unique culture, increased scale and national reputation
    • Remains an attractive location for talent with over 1000 fee earners at the year end
    • Strong net promoter scores, driven by strong culture (Client NPS +72, Employee NPS +24)
    • Workforce remains stable with very low churn of 9% (excluding anticipated churn in acquisitions), which continues to improve. Average length of service of partners of over 9 years

  • Expanded Client Services Director team working more closely with Operational Directors
    • Added four new Client Services Directors ("CSDs"), through recruitment and internal promotion
    • New lines of reporting allowing CSDs and Operational Directors to work more closely with each other, reporting directly to CEO and CFO

  • Continued progress with ESG, with new targets being developed
    • Increasing momentum in the 4 our community programme with colleagues doing more activities together to support local communities
    • Continued focus on the health and wellbeing of colleagues, a key theme at a successful annual conference on 10th June 2022 with over 1,000 colleagues socialising together, giving feedback and being encouraged to work with our retained psychologist on mindset
    • Greater investment in local office social events encouraging colleagues to have fun and get to know each other better to promote well-being and to accelerate the return to office-based working
    • New targets being developed for 2022, having surpassed performance targets for our greenhouse gas emissions, and paper consumption set in 2019
    • Maintained good gender balance in senior positions, with five of the 12 CSDs and 60% of the Board being female
    • Expanded ESG governance to include climate change, adopting TCFD guidance
  • Current trading and outlook
    • A positive start to the new year with prior year acquisitions integrating and performing well and as planned
    • Continuing to attract high calibre professionals, with strong client followings
    • Acquisition pipeline growing in quality and quantity, aided by the return to normality following the pandemic and accelerated by the uncertain economic environment
    • While uncertainty around economic conditions persists, the Board considers that the business is highly resilient, with a significant market opportunity, the right strategy and team in place to deliver on it, giving confidence in its medium-term outlook

David Beech, CEO of Knights, commented:

"We have delivered another robust financial performance despite the short-term challenges experienced in the fourth quarter, with a positive start to the new financial year supported by the acquisitions completed in prior years.

"I am extremely grateful to the support our people have given to me and the business in recent weeks and we have a great culture and high morale which will enable us to continue to make good progress in the current year.

"Our ability to attract and retain top industry talent remains strong, while our pipeline of high quality acquisition targets continues to grow.

"I'm very pleased not only with the level of growth we have delivered over the last ten years since we corporatised, growing from two offices and £9m of revenue to a Top 50 law firm with 22 offices, and revenue of over £125m but also with our continued discipline to deliver market leading working capital days and cash generation.

"We continue to execute our strategy and remain confident in our outlook, as we leverage our enhanced scale and national reputation to realise our ambition to be the leading legal and professional services firm outside London."


Click here to view our full RNS announcement.