A strong platform underpinned by scale, brand and a diverse service offering
Knights today announces its half year results for the six months ended 31 October 2022.
- Revenue increased by 19% to £71.2m (HY 2022: £59.7m)
- Underlying Profit Before Tax up 19% to £9.0m (HY 2022: £7.6m); underlying PBT margin of 12.6% (HY 2022: 12.6%)
- Basic underlying Earnings Per Share increased to 8.26p (HY 2022: 6.98p). Basic EPS 3.46p (HY 2022: loss of 2.03p)
- Lock up, excluding impact of Coffin Mew acquisition, was 98 days, 103 including Coffin Mew (HY 2022: 99 days)
- Cash conversion of 57% (HY 2022: 105%)
- Net debt of £35.6m (30 April 2022: £28.9m), in line with the Board's expectations
- Interim dividend of 1.53p (HY 2022: 1.46p per share)
Strategic and operational highlights:
Secured position as the UK's largest regional commercial law firm
- Continued momentum in recruitment of top-tier talent from Top 50 law firms. Average number of full time equivalent fee earners employed during the period was 1,075 (HY 2022: 931)
- Scale and value proposition attracting new clients both within the UK market and internationally
- Large and more diverse client base providing resilience to macroeconomic pressures
Enhanced footprint, strengthening Knights' presence in key regional markets
- Acquisition of Coffin Mew during the period bolsters Knights' presence in the South of England
- Successful integration of Keebles, Archers Law and Langleys, strengthening footprint in Yorkshire, the North East of England and the East of England; key people, clients and revenues retained; profitability and lock up days approaching Group levels
- Disposal of the non-core HPL part of Langleys completed in September 2022
- Acquisition of Meade King announced post-period end, facilitating entry into Bristol's fast-growing legal services market and strengthening our position in the South West
Investment in operational backbone to support continued growth
- Continued expansion of the Client Services Executive (CSD), with a further two CSD appointments during the period
- New lines of reporting from CSDs and Operational Directors delivering benefits across the business
Current trading and Outlook:
- Focused on improving organic growth; driven by improved margins, improving productivity and investment in more profitable fee earners
- Full year outlook underpinned by increased interest income on client account monies driven by interest rates returning to normal levels
- Macroeconomic outlook likely to support recruitment momentum and acquisition opportunities; highly selective approach to assessing future acquisition targets
David Beech, CEO of Knights, commented:
"Knights has delivered profitable, cash generative growth over the period and maintained this positive momentum into the second half.
"We are delighted that our Group is now the largest regional commercial law firm in the UK. The strength of the Knights brand, and our reputation as a trusted and quality adviser, underpins our ability to attract and retain top industry talent, high-quality clients and acquisition targets.
"Our scale and unique proposition is resonating with a wider range of companies than ever before, including further afield in the USA and Europe. This positions us well as we focus on delivering quality organic growth in the second half and beyond.
"In a relatively flat market, we have driven our revenue growth through acquisitions. With our focus on improving productivity along with improved gross margins, underpinned by increased interest income, we are confident of delivering full year results in line with market expectations, and continuing to cement our position as the leading legal and professional services business outside London."
A presentation of the half year results will be made to analysts via a webinar at 9am today. To register interest in attending, please contact Christian Harte at MHP Communications on 020 3128 8013 or email firstname.lastname@example.org.
To read the full announcement click here.