Knights Group Holdings PLC · LSE:KGH
Knights — FY2022 Earnings Presentation
32 slides from Knights's earnings presentation, July 2022
Slide 1: Full year results
Full year results For the year ended 30 April 2022 Strategy execution driving growth July 2022
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: A decade of Knights' scalable corporatised model
A decade of Knights’ scalable corporatised model Continued focus on markets outside London Underlying profit before tax Premium Scale and national reputation underpinning premium position Mid-teens quality from Sustainable a competitive Deeper talent pool post-pandemic and lower costs outside adjust
Slide 4: A diversified, premium national provider
A diversified, premium national provider A full suite of services strengthened A broad client base of quality by sector specialisms and non-legal national and local businesses: services (% of total revenues) % Real estate Employment 37.3% 5.6% of total revenues 390+ Dispute Resolution Private Client
Slide 5: Track record of profitable, cash generative growth
Track record of profitable, cash generative growth 140 125.6 109% Cash 120 conversion 103.2 100 33.8% 80 74.3 Revenue CAGR* 60 52.7 National scale 40 providing growth 18.4 18.1 opportunities 20 13.6 9.4 0 2019 2020 2021 2022 24.4% Underlying Revenue (£m) Underlying PBT (£m) PBT CAGR* *3 year CAGR Kn
Slide 6: Strategy continues to drive sustainable growth
Strategy continues to drive sustainable growth 1 Differentiated corporate structure increasingly relevant, understood and attractive Strong cultural integration, driven by the growing Client Services Executive and ‘one team’ 2 collaborative culture 3 Step change in credibility with scale and nationa
Slide 7: Full year overview – key financials
Full year overview – key financials FY Revenue Underlying PBT1 Underlying EPS1 +22% -2% - 6% (FY organic growth of 2%) To To At £125.6m £18.1m 17.2p (FY 2021: £103.2m) (FY 2021: £18.4m) (FY 2021: 18.3p) Net Debt Underlying Cash Conversion2 Period end lockup3: £28.9m 109% 86 days after £18.0m of acqu
Slide 8: Robust financial performance
Robust financial performance Summary income statement (£’000) 30 April 30 April 2022 2021 • Income from acquisitions £5.8m in the period Revenue 125,604 103,201 • Income from FY21 acquisitions of £16.9m, n Revenue Growth 22% 39% increase of £14.8m from the prior year • Organic growth of 2% for FY22,
Slide 9: Modest decline in underlying PBT
Modest decline in underlying PBT Underlying PBT Bridge (£m) Full year impact of FY21 Investment in property, creating the 25.0 platform for future 0.5 (1.1) organic growth 2.2 0.3 (0.7) (1.9) 20.0 18.4 0.4 18.1 15.0 Investment is client service directors and support staff 10.0 creating a sustainable
Slide 10: Key Performance Indicators
Key Performance Indicators Gross profit margin (%) 49.5 49.3 49.3 49.1 48.9 £124k 48.9 Fees per fee earner 48.7 48.5 48.3 48.1 47.9 47.9 47.7 47.5 2020 2021 2022 22% FY Revenue Growth Fees per fee earner (£k) (2% organic in FY22) 130 124 119 121 120 110 100 109% Cash 90 Conversion 80 2020 2021 2022
Slide 11: Balance sheet & liquidity
Balance sheet & liquidity Summary balance sheet £’000 30 April 2022 30 April 2021 Goodwill and intangible assets Goodwill & other intangibles 82,172 79,523 arising on acquisitions in FY22 of Right of use asset 40,663 40,406 c£11m Property, plant and equipment & other assets 10,240 9,538 Working capi
Slide 12: Progress reducing lockup days of acquisitions
Progress reducing lockup days of acquisitions Industry leading working capital At acquisition At 30 April 22 140 days 97 days Group lockup days* continues to progress 165 days 136 days 100 95 103 days 89 days 90 122 days 90 days Lock-up days 85 93 105 days 65 days 80 89 88 85 86 75 119 days 79 days
Slide 13: Net debt bridge
Net debt bridge 50 Net debt at 1.2 18.1 2.6 45 4.1 £28.9m 40 18.0 increased from 35 £21.1m at April 21 30 28.9 25 21.1 RCF available 20 15 £60m £31.1m headroom 10 in current facilities as at 30 April 2022 5 0 Net debt at Net cash Tax paid Capex Dividends Net cash Net debt at 30th April 2021 outflows
Slide 14: 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 15: A clear strategy for growth
A clear strategy for growth To cement our position as a leading legal and professional services business outside London: Strategic pillars Grow Organically Strategic Acquisitions Scale the Operation by Leveraging Investment Knights │ Full year results 15 15
Slide 16: Leveraging our scale and national reputation
Leveraging our scale and national reputation Increased scale and national Sticky client base reputation driving credibility yielding cross selling Grow Organically as a premium provider opportunities Greater awareness New regional clients underpinning recruitment attracted by Knights’ Strong momentu
Slide 17: Attractive destination for high calibre talent
Attractive destination for high calibre talent +24 9% eNPS Churn, excl. acquisitions* (FY21: +39) (FY21: 5%) 109 978 Promotions Actual FTE Fee Earners as at 30 April 2022 (FY21: 86) (30 April 2021: 865) *Churn is calculated based on the number of qualified fee earners employed by the Group for more
Slide 18: Unique and innovative approach to pricing
Unique and innovative approach to pricing Pricing consistently Pricing reflects premium improving across all levels of service and value Grow Organically 22 offices for clients Increasing adoption of pricing best practice, Offsetting inflation and positively impacting revenue limited salary cost pre
Slide 19: Exploring opportunities to broaden offering
Exploring opportunities to broaden offering Launched specialist debt Supports medium-term plan advisory offering during the to expand to 35 offices Grow Organically period Exploring a number of other Strong regional opportunity complementary services A unique and diversifying Including: corporate fi
Slide 20: Progressing acquisition strategy and pipeline
Progressing acquisition strategy and pipeline Our acquisition principles Strategic Strong cultural fit Acquisitions Bolt-ons to provide scale Four acquisitions Entry into new markets since end of FY21 New specialisms Focus on quality over quantity Key Acquisitions since 30 April 2021 Offices £ Total
Slide 21: Recent acquisitions
Recent acquisitions Acquisition strategy gained momentum during the year with 3 acquisitions, and 1 post-period end Integration of newly acquired businesses is progressing well, overseen by the growing Client Services Executive Strategic Acquisitions Entry into Sheffield Keebles LLP Strong corporate
Slide 22: Acquisitions and driving performance
Acquisitions and driving performance Past acquisitions embedded into Knights Lock up Revenue People* Acquisitions At At At 30 April At acquisition 20% Churn At 30 April At 30 April acquisition acquisition Strategic Acquisitions £2.2m for 6 151 Days 75 Days £4.0m £3.2m 38 32 months Progress delivered
Slide 23: Bandwidth for sustainable growth
Bandwidth for sustainable growth Expanding number of Client Services Directors – our key executives This team, together with the Operational Directors, now reports directly to the CEO and CFO Scale the Operation Lisa Mark James Darren Sarah Perry Richard Shacklock Beech Sheridan Walker Birmingham Wo
Slide 24: ESG
ESG Knights’ strategic ESG programme includes a framework of KPIs and goals which are continuously kept under review Having surpassed targets set in 2019, new science-based targets being developed for 2022 and beyond These help Knights deliver for our people and communities and are a vital part, not
Slide 25: Summary & current trading
Summary & current trading 1 2 3 Acquisition strategy Delivered profitable, cash Strong recruitment progressing well with generative growth despite momentum and low significant opportunities short term challenges in the employee churn across all for further high-quality last quarter levels acquisitio
Slide 26: Appendix
Appendix
Slide 27: Deferred and Contingent consideration
Deferred and Contingent consideration (excludes the acquisition of Coffin Mew post year end) Deferred consideration Contingent and Accrued consideration Total (£’000) (£’000) (£’000) Accrued 30 April 2022 3,631 1,838 5,469 Payable FY23 1,210 3,865 5,075 FY24 1,210 2,801 4,011 FY25 1,211 1,372 2,583
Slide 28: Reconciliation of underlying to statutory measures – PBT
Reconciliation of underlying to statutory measures – PBT Underlying profit before tax (£,000) 30 April 2022 30 April 2021 Profit before tax 1,056 5,509 Amortisation on acquired intangibles 3,815 2,622 Non-underlying operating costs 13,260 10,288 Adjusted profit before tax 18,131 18,419 Knights │ Ful
Slide 29: Reconciliation of underlying to statutory measures – PAT and EPS
Reconciliation of underlying to statutory measures – PAT and EPS Underlying profit after tax (£,000) / Underlying earnings per share (pence) 30 April 2022 30 April 2021 Profit / (Loss) after tax (2,531) 3,402 Amortisation on acquisition related intangibles 3,815 2,622 Non-underlying operating costs
Slide 30: Organic growth calculation
Organic growth calculation £'000 30 April 2022 30 April 21 Income pre FY 22 acquisitions 102,829 101,058 Organic growth excludes income growth from acquisitions in the year FY 21 acquisition income 16,944 2,143 of their acquisition, and for the first full financial year following FY 22 acquisition i
Slide 31: Leadership team
Leadership team David Beech Kate Lewis Chief Financial CEO Officer 12 Client Service Directors Finance Andrew Pilkington James Sheridan TBC Julia Stokes Lisa Shacklock Mark Beech Lead Operations Lead M&A Director Group FD Finance Director Director Victoria Mortimer Richard Wollacott Sarah Perry Jess
Slide 32: Thank you
Thank you Knights Registered Office The Brampton Newcastle-Under-Lyme Staffordshire ST5 0QW Tel: 0344 371 2562
Knights Group Holdings — FY2022 Earnings Presentation on 6ix