Knights Group pulls dividend as part of cost-saving efforts

(Sharecast News) - Legal and professional services firm Knights Group will not recommend a full-year dividend as part of an effort to conserve cash amid the Covid-19 pandemic.

Knights Group said on Thursday that it expects full-year revenues to be up around 40% year-on-year at roughly £74m, while underlying pre-tax profits were pegged to be about 44% stronger at £13.5m, representing a marked increase in margins during the second half.

However, the AIM-listed group warned that it had felt the impact of the lockdown in April due to the economic environment and a stalling of activity by other law firms during the month, which resulted in short term disruption to Knights' ability to transact on behalf of its clients.

While Knights said it had achieved a "high level of cash conversion" during the period, with a better-than-expected year-end net debt position of £15.9m, the group decided it was "not appropriate" to recommend paying a dividend given its recent cost-saving measures.

Chief executive David Beech said: "Our early actions have positioned the group well for the current market environment and I am proud of the way in which our people have responded with such agility to working from home as they continue to deliver outstanding service to our clients.

"Beyond the near term, we anticipate that Covid-19 will only accentuate the 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."

As of 1035 BST, Knights shares were up 0.71% at 382.70p.