Knights Group . Regulatory News (KGH)

19 May 2023

Knights Group Holdings plc

("Knights", the "Company" or the "Group")

Full Year Trading Update

Knights, a fast-growing legal and professional services business in the UK, today provides a trading update for the year ended 30 April 2023.

The Group anticipates full year revenue of c.£142m, up by 13% compared to the prior year (2022: £125.6m), with underlying PBT1 anticipated to be c. £21.5m, a 19% increase on the prior year (2022: £18.1m).

Market leading lock-up2 of 87 days at 30 April (FY 2022: 86 days), with debtor days of 30 days (FY 2022: 31 days) reflects the Group's continued discipline of day-to-day cash collection and working capital management. Net debt3 as at 30 April 2023 is expected to be c.£29m giving significant headroom against the Group's Revolving Credit Facility of £60m.

The Group's reputation and culture continue to be instrumental in attracting high quality talent across the regions in which it operates, where it is increasingly well-positioned as it continues to scale, selectively, as is the appeal of Knights' corporate model in the current macro environment. The Group is also making strong progress in driving operational improvements and productivity across the business, with the benefits of this expected to be realised in the new financial year and beyond, aided by a strong team of Client Services Directors working in close alignment with the operational teams.

Acquisitions announced during the year, Coffin Mew and Meade King, are integrating well and performing in line with expectations. The Group continues to selectively review a pipeline of potential targets that align with its strategy, and earlier this month agreed to acquire St James Law Limited, an independent full service commercial law firm based in Newcastle, and Baines Wilson LLP, primarily based in Carlisle, one of the leading independent law firms in the North West. These acquisitions are in strategic growth markets in the North of England, further strengthening Knights' existing presence in the region.

David Beech, CEO of Knights, commented: 

"Knights has made good progress during the year, delivering on our strategy of selectively making acquisitions, attracting high quality talent, driving operational improvements across the business and strengthening our team of Client Services Directors.

We enter the new financial year well placed to deliver organic growth from our increased network of integrated regional offices, with positive momentum across the business from new client wins and a strong pipeline of partner hires."

Knights will provide a further update on trading with its full year results announcement in mid July 2023.

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Notes to Editors

Knights is a fast-growing, legal and professional services business, ranked within the UK's top 50 largest law firms by revenue. Knights was one of the first law firms in the UK to move from the traditional partnership model to a corporate structure in 2012 and has since grown rapidly. Knights has specialists in all key areas of corporate and commercial law so that it can offer end-to-end support to businesses of all sizes and in all sectors. It is focussed on key UK markets outside London and currently operates from 23 offices located in Birmingham, Brighton, Bristol, Cheltenham, Chester, Crawley, Exeter, Leeds, Leicester, Lincoln, Maidstone, Manchester, Newbury, Nottingham, Oxford, Portsmouth, Sheffield, Southampton, Stoke, Teesside, Weybridge, Wilmslow and York.

 1 Underlying PBT is before amortisation of acquired intangibles, non-underlying costs relating to acquisitions, non-recurring finance costs, restructuring costs in the reporting period, and non-underlying share based payments. The Board believes that these underlying figures provide a more meaningful measure of the Group's underlying performance.

2  Lock up is calculated as the combined debtor and WIP days as at a point in time. Debtor days are calculated on a count back basis using the gross debtors at the period end and compared with total fees raised over prior months. WIP days are calculated based on the gross work in progress (excluding that relating to clinical negligence claims, insolvency, and ground rents, as these matters operate mainly on a conditional fee arrangement and a different profile to the rest of the business) and calculating how many days billing this relates to, based on average fees (again excluding clinical negligence claims, insolvency, and ground rents fees) per month for the last 3 months.

Lock up days excludes the impact of acquisitions in the last quarter of the reporting period.

3 Net debt excludes lease liabilities.