Continued momentum, building on the critical mass achieved

Knights, the UK's fastest growing legal and professional services business, today announces its full year results for the year ended 30 April 2021.

Financial highlights

  • Revenue increased by 39% to £103.2m (2020: £74.3m)
    • H2 organic revenue growth of 10% (H2 2020: 10%), representing a significant recovery from the 15% decline in H1 2021 due to COVID-19
  • Gross margins increased to 49% (2020: 48%), despite the impact on revenue from COVID-19 in H1
  • Underlying PBT rose by 35% to £18.4m (2020: £13.6m)
  • Underlying PBT margin of 17.8% (2020: 18.3%)
    • Strong H2 2021 margin of 21.8% (H2 2020: 19.8%, H2 2019: 17.4%), represented a significant improvement from H1 2021: 13.0% (H1 2020: 16.4%) despite some COVID-19 impact, reflecting the continued leverage of overheads
  • Underlying EPS increased by 27.7% to 18.30p (2020: 33p). Basic EPS of 4.14p (2020: 2.44p)
  • Strong cash conversion of 96% (2020: 80%), following a year of significant investment and reflecting the roll out of Knight’s approach to cash management in recent acquisitions
  • Lock up was 89 days (2020: 85 days excluding acquisitions), aided by robust systems and a strong culture of day-to-day cash collection
  • Net debt of £21.1m (30 April 2020: £15.9m) was lower than anticipated due to the Group’s strong cash management
  • No final dividend declared

Strategic and operational highlights

  • Strengthened our geographic coverage and practice areas as we scale throughout the UK
    • Four acquisitions in line with our strategy to be the leading legal and professional services business outside London
    • Keebles and OTB Eveling expanded the Group’s footprint into Sheffield and the South West, Mundays strengthened Knights’ presence in the South East
    • Housing Law Services, which completed in April 2021, brought a niche housing team to complement Knights’ existing housing services offering
    • Acquisitions continue to integrate faster than plan
  • Strong recruitment and continued investment to build a platform for future growth
    • Momentum in recruiting high calibre talent; the majority from other top 50 law firms
    • Continued to invest in high quality office spaces in Birmingham, Leeds, Nottingham and York
    • Strong culture supporting increased net promoter scores (Client NPS up 15 to +75, Employee NPS up by 3 to +39)
    • Continued to invest in technology to support growth and acquisitions, drive efficiency, enable automation and enhance client relationships
    • Appointed two additional Client Service Directors adding cultural leadership and integration capability
  • Significant progress with our ESG agenda
    • Developed a newly strengthened framework of ESG related KPIs, in line with our commitment to building a sustainable business
    • Appointed Gillian Davies as Senior Independent Non-Executive Director, bringing significant experience in high growth businesses and achieving 50% gender diversity on the Board

Current trading and outlook

  • Momentum has continued into FY 2022, with an increasing quantum of new, quality instructions, supported by a growing team of motivated and committed people across the Group
  • We continue to see a strong pipeline of senior fee earner candidates
  • We continue to have active engagement with a strong pipeline of possible acquisition opportunities
  • In a challenging year for many businesses across the UK, the Board’s confidence in the Group’s strategy and market leading position in the regions has been reinforced

 

David Beech, CEO of Knights, commented:

“We have delivered a robust performance during the year, with a rapid return to stronger levels of organic growth in the second half, complemented by high calibre acquisitions that further elevate our position as a market leader outside London.

“Having reached critical mass following recent acquisitions, the Group is increasingly attracting high calibre talent with strong client followings, good quality clients who recognise the value of our premium service, and legal service firms that would like to be part of a larger, diversified, forward thinking group.

“Looking forward, we expect that COVID-19 will only accentuate these 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.”

Click here to view our full RNS announcement.