K3 Capital performance comfortably ahead at half year stage
Bolton-based professional services specialist K3 Capital Group has reported a strong first half performance, which has continued into the second half of its fiscal year.
In the six months to November 30, 2021, group revenue rose from £18m the previous year to £31.2m, with strong organic growth, and a pre-tax profit of £5.2m represented a 160% improvement on the 2020 figures of £1.96m.
The group adjusted EBITDA was £9.4m, up from £5.8m a year ago, while net cash stood ast £8.8m, down from £10.1m last year.
All divisions recorded growth in revenues and profits: M&A revenue were £9.8m (H1 2021: £5.9m), with EBITDA £5.0m (H1 FY21 £2.9m); Tax: Revenue achieve £4.8m (H1 2021: £2.6m), EBITDA £2.4m (H1 FY21 £1.4m); and Restructuring revenue was £16.6m (H1 2021: £9.5m), and EBITDA £3.0m (H1 FY21 £2.3m).
The interim dividend per share has been increased from 3p to 4p per share.
K3 said its M&A Division continues to see strong levels of KPI performance, with growing transaction fee pipelines underpinning expectations for the second half and beyond. December was the most profitable month within the M&A division in fiscal year 2022 to date
The Tax Division now offers broader service lines and greater scale following the acquisition of Knight R&D – which it funded with a £10m share placing – and the launch of K3 Tax Advisory. While the pandemic is causing temporary reductions and delays in R&D claim processing, the group is encouraged by its growing client base driven by the launch of its new client acquisition model
The Restructuring Division is pleased to see that the insolvency market is showing signs of recovery following the withdrawal of government support and the unwinding of legislative changes. While there are obvious time delays before these market improvements filter through to financial performance, K3 continues to build its market share and fee earner base as it looks to take advantage of the returning market
Chief executive, John Rigby, said: “Both myself and the board are extremely satisfied with a strong financial performance during the first half of FY22, with trading comfortably in line with market expectations.
“The group successfully completed the acquisitions of Knight Corporate Finance and Knight R&D in the period, both of which are immediately earnings enhancing. Knight Corporate Finance is a specialist M&A advisory firm within the telecoms and tech sector, and Knight R&D is a specialist research and development tax advisory firm servicing UK SMEs.
“The acquisitions are in line with K3’s strategy to acquire complementary and value accretive businesses to build out its existing SME focused service lines, providing the group with counter-cyclical service lines.
“The board remains confident that the outlook for the remainder of the financial year, and beyond, is positive and is pleased to report a strong start to H2 FY22, with December delivering £6m of revenue and £1.7m EBITDA during a traditionally quieter festive period.”
He added: “We continue to evaluate acquisition targets which could be additive to overall product offering and allow further diversification of group revenues.”
