A strong performance as we continue to build a resilient business of scale

Knights, one of the UK's fastest growing legal and professional services businesses, today announces its full year results for the year ended 30 April 2020.

Financial highlights

  • Revenue increased by 41% to £74.3m (2019: £52.7m), including 10% organic revenue growth
  • Underlying PBT rose by 45% to £13.6m (2019: £9.4m restated for IFRS 16; £9.8m reported)
  • Underlying PBT margin of 18.3% (2019 restated for IFRS 16: 17.9%)
  • Underlying EPS increased by 27% to 14.33p (2019: 31p restated for IFRS 16; 11.88p reported). Basic EPS of 2.44p (2019: 5.27p restated for IFRS 16; 5.84p reported)
  • Strong cash conversion of 80% (compared with exceptional performance in 2019: 137% restated for IFRS16), following a year of significant investment and reflecting lock up in recent acquisitions
  • Lock up was 85 days excluding the impact of acquisitions (2019: 88 days), aided by robust systems for and a strong culture of day-to-day cash collection
  • Net debt of £15.9m was ahead of market expectations after a £3m outflow in respect of all acquisition consideration (including deferred) net of the £20m placing proceeds (30 April 2019: £14.1m)
  • No final dividend proposed, as previously announced. Total dividend will consist of the interim dividend of 1.10p per share (2019 total dividend: 1.87p per share)

Strategic and operational highlights

  • Strong recruitment and continued investment in building a platform for future growth
    • Recruited a net 108 fee earners in the year (2019: net 46 fee earners)
  • Established a leading national employment team – including recruitment of recognised leaders in this field from other Top 50 law firms
  • Recruited 15 operational staff; six operational directors (including an operations director, a recruitment director, and two client service directors) and a compliance manager
  • Entered York with a new office opening, expanded to new offices in Manchester and invested in increased capacity in Oxford
  • Broadened our geographic coverage as we scale throughout the UK
  • Entered the major legal markets of Birmingham, Leeds and the South East via the acquisitions of EGL and ERT, Shulmans, and ASB respectively
  • Added defensive housing association specialism in Manchester and scaled the Group’s presence in the East Midlands with the acquisitions of Croftons and Fraser Brown respectively

COVID-19

  • Early cost saving actions positioned the Group well to trade through the current environment; ability to act swiftly demonstrated the benefit of a corporate structure
  • Lawyers continue to deliver outstanding service to clients, with no impact on Knights’ ability to transact
  • Resilient and diversified model benefitted the Group during lockdown
  • A strong balance sheet with a conservative gearing level and good liquidity following the recent placing to raise £20m and £40m extended revolving credit facility

Current trading and outlook

  • Early signs of a recovery in market conditions compared with the disruption experienced at the beginning of April
  • Integration of recent acquisitions ahead of expectations
  • Near term focus on embedding recent acquisitions and recruitment from a strong pipeline of senior fee earner candidates, who typically bring a client following
  • Beyond the near term, COVID-19 is expected to accentuate the pipeline of recruitment and acquisition opportunities
  • Confident of emerging in a stronger position from this current environment

David Beech, CEO of Knights, commented:

“We have delivered a year of strong, profitable, cash generative growth and demonstrated progress in line with our strategy to complement organic growth with carefully targeted acquisitions.

“Our recent investments in systems, people and through acquisitions provide the Group with the benefits of scale and resilience, positioning it well for a recovery in our markets.

“Whilst the market remains uncertain, we are pleased to see early signs of a recovery and the current year is expected to benefit from the full year effect of prior year acquisitions and our continued momentum in recruiting high calibre talent, many from other Top 50 law firms.

“Beyond the near term, we anticipate that COVID-19 will only accentuate the recruitment and acquisition opportunities for our resilient, well-invested, diversified and cash generative business in the highly fragmented and often under-invested market for legal services outside London.”