Knights Group Holdings Plc · LSE:KGH
Knights — FY2024 Earnings Presentation
34 slides from Knights's earnings presentation, July 2024
Slide 1: Full year results
Full year results For the year ended 30 April 2024 A robust performance, reflecting resilience, scale and financial discipline July 2024
Slide 2: Company disclaimer
Company disclaimer These presentation slides (the “Slides” have been issued by Knights Group Holdings plc (the “company”). The Slides have been prepared by and are the sole responsibility of the Company. Although all reasonable care has been taken to ensure that the facts stated in the Slides and ac
Slide 3: Full year overview
Full year overview A robust performance, reflecting resilience, scale and financial discipline Significant Encouraging Return to organic profitability and improvements in growth cash generation market trends Sustained momentum in Resilient and Recent acquisitions recruitment, diversified service per
Slide 4: A fully integrated national business and scalable platform for future growth
A fully integrated national business and scalable platform for future growth Premium legal services, delivered locally, across the UK Established presence across key UK regions Track record of acquiring businesses 23 £150m 1,037 Average number of locations FY24 revenue Fee earners1 Stoke 2012 Exeter
Slide 5: A robust, scalable platform with a diversified portfolio of services
A robust, scalable platform with a diversified portfolio of services… Broad and deep specialisms serving both corporate and individual clients Core legal services offering 29% Real estate 16% Private wealth Expert, multi-sector advice in a broad range of commercial matters including asset management
Slide 6: A unique collaborative culture to drive future growth
A unique collaborative culture to drive future growth National scale and premium brand reinforces an attractive proposition for fee earners, clients and targets A leading UK regional provider of diversified legal and professional 13 Commercial structure services Premium national 23 Client service br
Slide 7: Demonstrated by our track record of profitable, cash generative growth
Demonstrated by our track record of profitable, cash generative growth 6 6 (6) See Glossary Knights │ Full year results 7
Slide 8: Full year overview: Key financials
Full year overview 7 Key financials FY Revenue Underlying PBT8 Underlying EPS9 +6% +17.3% +8% (organic growth of 1.9%) To To At £150.0m £25.3m 21.81p (FY 2023: £142.1m) (FY 2023: £21.6m) (FY 2023: 20.20p) Net Debt10 Underlying Cash Conversion5 Period End Lockup11 £35.2m 131% 78 days after c.£11.9m o
Slide 9: Robust financial performance
Robust financial performance Summary income statement (£’000) 30 April 2024 30 April 2023 Revenue 149,957 142,080 • £7.9m revenue growth; £5.4m from the impact of FY23 and FY24 acquisitions and disposals, with Revenue Growth 6% 13% the balance being organic Other operating income 10,439 6,718 • Gros
Slide 10: Revenue bridge (£'m)
Revenue bridge (£’m) Acquisition income Organic income 150 5.1 (4.6) 8.4 1.0 15.3 140 (0.7) (1.3) 9.9 130 120 134.7 110 132.2 100 90 Revenue FY23 FY23 acquisitions Sale of HPL FY24 acquisitions Residential Strategic All other sectors Revenue FY24 Property & M&A reductions Organic income sectors Acqu
Slide 11: Significant increase in underlying PBT
Significant increase in underlying PBT 8 Underlying PBT Bridge (£’m) 35 StrongA year of for platform consolidation of the future profitable cost base growth whilst driven by 30 continuing to Client experienced invest (1.2) for growth Services Directors’ 3.7 (0.9) (0.7) (1.3) 25 (0.4) 4.5 Prior year
Slide 12: Key Performance Indicators
Key Performance Indicators Gross profit margin (%) Cash generation - Underlying FCF5 (£m) 55 30 49.3 48.5 48.8 50 24.6 45 25 40 20.3 20 35 15.7 30 15 25 20 FY22 FY23 FY24 10 FY22 FY23 FY24 Average Fees per FTE1 fee earner (£k) Average number of FTE1 fee earner 1100 1,077 150 145 1,037 1050 1,015 140
Slide 13: Summary cash flows
Summary cash flows 30 April 30 April £'000 2024 2023 Underlying EBITDA 13 38,682 33,379 131% Change in working capital (3,549) (5,196) Underlying Cash Conversion 5 Cash outflow for IFRS 16 leases (6,245) (6,728) Movement in underlying share based payment charge 1,121 1,248 Cash generated from underl
Slide 14: Industry leading debtor days
Industry leading debtor days Progress reducing lock up11 days of acquisitions Our unique culture drives cash generation At At acquisition 30 April 24 120 116 113 197 days 76 days 110 103 105 FY22 97 100 90 151 days 60 days 80 Lockup days 70 36 31 30 34 60 28 169 days 87 days 50 40 215 days 80 days F
Slide 15: Balance sheet & liquidity
Balance sheet & liquidity Summary balance sheet 30 April 30 April £'000 2024 2023 Goodwill and other intangibles 86,900 88,021 • Decrease in Right of Use assets to £34.0m Right of use asset 34,034 38,200 (FY23: £38.2m) following assignment and surrender of 4 leases in the period Investment in joint
Slide 16: Net debt bridge (£'m)
Net debt10 bridge (£’m) Net debt at £35.2m £29.2m at 30 April 23 RCF available £70m £34.8m headroom in current facilities as at 30 April 2024 Covenant leverage 1.1x at 30 April 2024 (1.2x at 30 April 23) Final dividend of 2.79p total dividend of 4.40p (10) See Glossary Knights │ Full year results 16
Slide 17: Aiming to double the business in the medium term
Ambitious plan to deliver significant revenue and profit growth Aiming to double the business in the medium term 25% growth from acquisitions Recruitment Disciplined Large total approach to of senior fee Volumes acquisition addressable earners market selection Strong Strong New and organic growth Re
Slide 18: Large and fragmented addressable market
Large and fragmented addressable market Highly attractive regional market, with vast opportunity for further consolidation Knights competitive advantage Large and fragmented addressable market 1 Unrivalled breadth of specialisms locally • Underserved locations with strong underlying demand for a bro
Slide 19: Tailwinds for organic growth
Tailwinds for organic growth Positioned for strong organic growth New client wins Annual price Recovery in and gaining share increases residential property of wallet Corporate activity Land and expand Strong partner including M&A opportunities recruitment recovery Knights │ Full year results 19
Slide 20: Delivering organic growth
Delivering organic growth Awareness of increased scale and momentum is driving recruitment and retention A compelling platform for legal professionals Fee earners focus on clients and quality work, leaving management 40 senior fee earners Quality work, to focus on the business joined the business
Slide 21: Delivering acquisitive growth
Delivering acquisitive growth Significant pipeline of complementary businesses Case Study - Teesside Compelling platform for sellers • Acquired in November 2021 • Fully integrated, delivered 29% organic growth in FY24 from pricing Progressive Opportunity to exit outdated partnership model and coll
Slide 22: Summary & current trading
Summary & current trading 1 2 3 Encouraging start to the year Concerted approach to client Sustained recruitment with strong recovery in acquisition and bringing momentum and good residential property more services to more retention rate existing clients 4 5 6 Active pipeline of attractive A return
Slide 23: Appendix
Appendix
Slide 24: Deferred and Contingent consideration
Deferred and Contingent consideration Deferred Contingent consideration consideration Total (£'000) (£'000) (£'000) Accrued at 30 April 2024 2,941 1,278 4,219 Payable at 30 April 2024 FY25 2,616 2,566 5,182 FY26 353 1,331 1,684 FY27 - 340 340 Total 2,969 4,237 7,206 Non Underlying P&L charge: FY25 2
Slide 25: Organic growth calculation
Organic growth calculation £'000 30 April 2024 30 April 2023 Organic growth excludes income Income pre FY23 / FY24 acquisitions 134,657 132,131 growth from acquisitions in the year of their acquisition, and for the first full FY23 acquisition income 10,248 9,255 financial year following acquisition,
Slide 26: Reconciliation of fee earner numbers
Reconciliation of fee earner numbers Partner & Senior Other-qualified Non-qualified Total Associates professionals professionals Integrar professionals Opening FTE at 1 May 2023 394 249 287 140 1,070 Acquisition starters (net of any FY23 and FY24 acquisition leavers) 8 2 - - 10 Re-classification / i
Slide 27: Reconciliation of underlying to statutory measures – PBT
Reconciliation of underlying to statutory measures – PBT Underlying profit before tax 8 (£'000) 30 April 2024 30 April 2023 Profit before tax 14,831 11,529 Amortisation on acquired intangibles 3,580 3,441 Non-underlying operating costs 6,630 6,473 Non-underlying finance costs 281 152 Underlying prof
Slide 28: Reconciliation of underlying to statutory measures – PAT and EPS
Reconciliation of underlying to statutory measures – PAT and EPS Underlying profit after tax 15 (£’000) / Underlying earnings per share 9 (pence) 30 April 2024 30 April 2023 Profit after tax 9,847 7,944 Amortisation on acquired intangibles 3,580 3,441 Non-underlying costs 6,911 6,625 Tax impact of n
Slide 29: Leadership team
Leadership team David Beech CEO Kate Lewis Andrew Pilkington CFO COO Lisa Bridgwood Jo Beech Lisa Shacklock James Christacos Jess Neyt Darren Walker Colin Jones James Sheridan General Counsel & Group Operations Client Services Client Services Client Services Client Services Group IT Director M&A Dir
Slide 30: Capital allocation
Capital allocation Cash flow Approach Maintaining industry leading Highly cash Strong cash generation 1 Existing business lockup, leveraging scale and enhancing acquisition cashflows generative with limited capex requirements Investment in quality people, 2 Organic growth collaborative work environm
Slide 31: ESG
ESG Knights’ strategic ESG programme includes a framework of KPIs and goals which are continuously kept under review During the year we have made good progress against commitments. We are working with an external consultant to set detailed measurable objectives during FY25 We are seeing see increasi
Slide 32: Guidance
Guidance High single digit organic growth driven by price increase of 6%, strong recruitment in FY24 continuing into FY25 together with increasing volumes already Revenue seen in the residential property market and anticipated in the corporate market in H2. Full year impact of FY24 acquisitions. Int
Slide 33: Glossary
Glossary 1. Fee earners are individuals working on a fee earning basis, which includes professionals (legal and non-legal) of all levels. This metric is calculated by averaging month-end FTE’s over the reporting period, including all organic, acquisition and Integrar fee earners. 2. Clients refers t
Slide 34: Thank you
Thank you Knights Registered Office The Brampton Newcastle-Under-Lyme Staffordshire ST5 0QW Tel: 0344 371 2562
Knights Group Holdings — FY2024 Earnings Presentation on 6ix