Profits and fee income rises offset dip in deals activity for Knights
Listed professional services business Knights expects to increase profits and fee income for the first half of its financial year, it said in a trading update for the half year ended 31 October 2023.
Half year revenue is on track to be £75.3m, an increase of 6% compared to the prior year (H1 23: £71.2m), with underlying PBT1 anticipated to be c.£11.5m, an increase of 28% on the prior year (H1 23: £9.0m) with underlying PBT margin increasing from 12.6% to 15.3%.
However the group warned of “a challenging backdrop in the housing and M&A markets”.
Net debt has also increased to £38.3m as of 31 October 2023 (H1 23, £35.6m, FY 23: £29.2m), after c.£7.5m of acquisition consideration, debt and related costs in the first half, providing significant headroom against the Group’s recently increased £70m revolving credit facility.
Knights has also recruited 20 senior staff in the half year, compared to nine in the same period last year, many of whom have been attracted by Knights’ differentiated ownership and business model, which offers no financial risk, compared to traditional equity partnership. Churn for the period was six percent, compared with 11% for the same period last year.
The integration of prior year acquisitions, Coffin Mew (Portsmouth) and Meade King (Bristol), has been successful and both are performing well, despite challenging market conditions for the residential property sector in the period.
During the first half, the Group completed the acquisition of St James Law (Newcastle) and Baines Wilson (Carlisle), further strengthening the Group’s presence in the North. Both acquisitions are integrating well and performing in line with the Board’s expectations.
David Beech, CEO of Knights, commented: “We continue to execute our strategy successfully, delivering profitable, cash generative growth, while focusing on delivering a premium service.
“Entering the second half, we are encouraged by the Group’s strong performance, as we continue to attract high quality, talented professionals, and monitor an attractive and growing pipeline of potential acquisitions for the Group.”
Knights listed on AIM in 2018, and has seen significant growth both organically and through the acquisition of more than 20 independent legal and professional services firms, with revenues increasing from £9m to £142m over that period.