Knights, the UK’s fastest growing legal and professional services business, today provides a trading update for the full year ended 30 April 2021.
Full year trading update
The Group anticipates revenue for the full year to be in excess of the market consensus of £100.8m representing a minimum 36% increase compared to the prior year (2020: £74.0m). This reflected 8% organic growth for the second half of the year despite the extended lock down during the last quarter of the financial year, representing a strong recovery from the significant COVID-related impact in the first half. Underlying PBT is anticipated to be moderately in excess of market consensus of £18.0m, representing a minimum 32% increase from FY20 and a circa 44% increase in underlying PBT in H2 FY21 compared to H2 FY20. This reflects the good organic growth in the core business and the successful integration of the acquisitions completed in FY20 and FY21. The results show a particularly strong margin performance achieved in the second half as the Group’s momentum returned.
This performance has been achieved without the Group using the Government’s Coronavirus Job Retention Scheme or any other Government support schemes.
Both the acquisitions the Group completed during FY21, OTB Eveling LLP and Mundays LLP, have been successfully integrated into the Company as planned and are performing in line with expectations. Since period end, the Group has announced the acquisition of Keebles LLP. The business has proved to be an exceptionally strong cultural fit for Knights and integration to date is encouraging.
The Group expects to selectively execute on an attractive acquisition pipeline during the current year, with the medium to long-term effects of COVID-19 only accentuating the Group’s acquisition opportunities in the highly fragmented market for legal services outside London.
Balance sheet and liquidity
The Group has continued to deliver excellent levels of cash conversion, reflecting its continued focus on industry-leading working capital management through robust systems for, and a strong culture of, day-to-day cash collection. This resulted in the year end net debt position being better than market consensus, with net debt excluding lease liabilities of £21.2m (FY 2020: £15.9m), after a £12.5m outflow in respect of all acquisition consideration (including deferred), and representing 0.9 times Underlying EBITDA. Knights, therefore, retains a strong balance sheet with a conservative gearing level and good liquidity.
The Board remains committed to a long-term progressive dividend policy, which will seek to take account of both the Group’s earnings growth and outlook, and its opportunities to invest in organic and acquisitive growth. An update will be provided with the announcement of its full year results 2021.
David Beech, CEO of Knights, commented:
"Our robust full year performance is testament to the well-balanced and highly diversified business we have built over a number of years. We are proud of the commitment our talented people across the business have shown, which has delivered this resilient performance during a difficult economic period. Having emerged in a stronger position from the initial stages of the pandemic, we saw good and growing momentum in the second half of the year.
"As well as adding a number of fee earners through acquisition, the critical mass the Group has now achieved means that its increased credibility, as a leading legal and professional services business outside London, is attracting both high calibre talent and an increasing number of opportunities with new and existing clients.
“With a well-invested platform and confidence in the Group’s strategy, we look forward to making good progress in the new financial year as we continue to execute on the acquisitive and organic opportunities we see ahead.”
Knights will provide a further update on trading with its full year results announcement on 14 July.