Knights Group Holdings Plc · LSE:KGH
Knights — FY2021 Earnings Presentation
33 slides from Knights's earnings presentation, July 2021
Slide 1: Full year results for the year ended 30 April 2021
Full year results for the year ended 30 April 2021 Continued momentum building on the critical mass achieved July 2021
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: Scalable business supported by corporatised model
Scalable business supported by corporatised model A proven and consistent strategy A scalable business with Industry leading working A leading firm outside London strong momentum capital days A highly efficient support staff Low single digit churn Robust financial position to fee earner ratio Highly
Slide 4: Confidence in our strategy reinforced
Confidence in our strategy reinforced Covid-19 Expanded Client Strengthened demonstrated the Services operational benefit of the Executive backbone with Group’s provides experienced corporate scalability for management structure growth hires Building a Demonstrated our Strong client sustainable abil
Slide 5: Track record of profitable, cash generative growth
Track record of profitable, cash generative growth 120 103.2 100 Revenue 80 surpassed £100m 74.3 Consistently 60 excellent cash 52.7 conversion exceeding 70% 40 34.9 Exciting growth opportunity remains 18.4 as we continue to 20 13.6 scale 9.4 4.8 0 2018 2019 2020 2021 Revenue (£m) Underlying PBT (£m
Slide 6: An attractive and robust platform
An attractive and robust platform #1 Fastest 4 growing legal Acquisitions services firm integrating in the UK1 remotely Employee NPS2 +39 +36 16 83 Offices in key H1 21 H2 21 Individuals promoted markets outside London (FY 2020: 13) Client NPS3 +75 3,121 +60 4.5:1 Client using Fee earner to support
Slide 7: Full year overview – key financial highlights
Full year overview – key financial highlights FY Revenue up 39% Underlying PBT (1) Underlying EPS(1) (H2 organic growth of 10%) up 35% Up 28% to £103.2m to £18.4m at 18.30p (FY 2020: £74.3m) (FY 2020 : £13.6m) (FY 2020 : 14.33p) Net debt of £21.1m 91% underlying cash Period end lockup (3): £1m bette
Slide 8: Solid financial performance
Solid financial performance Summary income statement (£,000) 30 April 30 April • Income from acquisitions £2.1m in the period 2021 2020 • Full year impact of FY 20 acquisitions of £28.4m Revenue 103,201 74,254 • Organic growth of 10% in H2 (£3.2m) offsetting Revenue Growth 39.0% 41.0% 15% (£4.8m) re
Slide 9: Organic growth calculation
Organic growth calculation £'000 H1 20 H2 20 FY 20 H1 21 H2 21 FY 21 Income pre FY 20 and FY 21 acquisitions 31,977 31,777 63,754 27,137 34,996 62,133 FY 20 acquisition income - 10,500 10,500 19,100 19,825 38,925 FY 21 acquisition income - - - - 2,143 2,143 Total reported income 31,977 42,277 74,254
Slide 10: Profit progression despite headwinds
Profit progression despite headwinds 20.0 Underlying PBT Bridge (£m) 0.2 19.0 0.1 (1.7) 0.4 (1.0) 18.0 0.6 0.6 17.0 5.6 16.0 15.0 18.4 14.0 13.0 12.0 13.6 11.0 10.0 FY20 PBT Estimated FY21 Covid organic Organic growth Leverage of Other income Additional IFRS Leverage of FY21 PBT contribution acquisi
Slide 11: Key Performance Indicators
Key Performance Indicators 17.8% 39% 91% Underlying PBT FY Revenue Cash Conversion Margin Growth (10% organic in H2) Gross profit margin (%) Underlying PBT margin (%) 52 20 18.3 50.4 17.9 17.5 18 50 48.5 48.9 16 47.9 13.4 13.8 48 14 12 46 10 8 44 43.6 6 4 42 2 40 0 2017 2018 2019 2020 2021 2017 2018
Slide 12: Industry leading lockup
Industry leading lockup Group lockup days* continues to progress 94 93 92 90 89 Lock-up days 88 88 86 85 84 82 80 FY18 FY19 FY20 FY21 • 89 days lock-up across the Group* remains broadly in line with our target of 90 days and is significantly ahead of the industry average • Acquisition lockup improve
Slide 13: Balance sheet & liquidity
Balance sheet & liquidity Summary balance sheet 30 April 30 April £’000 2021 2020 Goodwill & other intangibles 79,523 69,135 • Goodwill and intangible assets arising Right of use asset 40,406 23,749 on acquisitions in the second half of Property, plant and equipment & other the year of c.£11m 9,538
Slide 14: Net debt bridge
Net debt bridge • Net debt at £21.1m; 0.8x underlying FY21 EBITDA1 • £40m RCF available : £18.9m headroom in current facilities (0.8) (4.3) 21.1 (11.9) 15.9 16.2 (2.1) (2.3) Net Debt at Operating cash Capex Corporation tax Cash paid for Restructuring Payment of Net Debt at 30 April 2020 inflows acqu
Slide 15: Capital allocation
Capital allocation Cash flow Approach Strong 1 Maintaining industry leading Highly cash Cash Existing lockup, leveraging scale and generative with limited Generation business enhancing acquisition cashflows capex requirements 2 Investment in quality people, Invest to achieve Organic collaborative wo
Slide 16: Continued momentum in the business
Continued momentum in the business Recruitment Critical Expanded Acquisitions Focus footprint mass on Clients quality Strength of reputation Type of work 16
Slide 17: Client Services Directors are driving operational performance
Client Services Directors are driving operational performance Eight Client Services Directors are driving the business operationally, up from two at IPO Lisa Shacklock James Sheridan Manchester, Wilmslow Leeds, Sheffield, York Jessica Neyt Andrew Pilkington Stoke, Chester Birmingham, Nottingham, Lei
Slide 18: Scaling our unique culture
Scaling our unique culture Our unique culture One business Strong financial Modernise through community management technology 18
Slide 19: Scaling our unique culture: One business community
Scaling our unique culture One business community Cultural management • ‘One-team’, service-driven culture encouraging greater collaboration across a growing suite of services • Developing, maintaining and nurturing culture while investing in training and development • Building news specialisms, e.g
Slide 20: Scaling our unique culture: Strong financial management
Scaling our unique culture Strong financial management • Ensuring clients are billed promptly • Maintaining industry leading lock-up and a strong discipline focused on cash collection • Acquisitions quickly aligned with Knights’ lock up levels • Focus on high quality recruitment with a client follow
Slide 21: Scaling our unique culture: Modernising through technology
Scaling our unique culture Modernising through technology • No secretaries, with all fee earners trained and competent in using technology and the Knights system • Well invested IT infrastructure and widespread use of technology creates a data rich business, allowing for greater automation and effic
Slide 22: Acquisitions and driving performance
Acquisitions and driving performance Past acquisitions embedded into Knights Acquisitions Lock up Revenue People* At acquisition At 30 April At acquisition 20% Churn At 30 April At acquisition At 30 April 130 Days 97 Days £45.9m £36.7m £38.9m 355 285 Progress delivered by: • Seamless integration of
Slide 23: Strong acquisition pipeline
Strong acquisition pipeline Recent acquisitions Our acquisition Keebles (May 2021) principles • Provided entry into Sheffield Strong • Strengthens presence in Yorkshire • Strong corporate and real estate offering cultural fit • Added 138 fee earners Bolt-ons to Mundays (March 2021) provide scale • A
Slide 24: Summary & current trading
Summary & current trading • Landmark year with critical mass achieved as we surpassed £100m revenue • Emerged from the initial stages of the pandemic in a strong position • Momentum built through H2; returned to strong organic growth • Increasing quantum and quality of new instructions across the bu
Slide 25: Appendix
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Slide 26: Financial guidance
Financial guidance Full year impact of 2021 acq ions — assuming normal 20% churn Strong organic growth Staff costs Leverage overall staff costs as a % of revenue (circa 5Obps), despite continued investment in recruitment, maintenance and investment in management and support functions to drive and su
Slide 27: Deferred and Contingent consideration
Deferred and Contingent consideration Contingent and Deferred Accrued consideration consideration Total (£’000) (£’000) (£’000) Accrued 30 April 2021 1,095 5,806 6,901 Payable FY22 1,095 9,972 11,067 FY23 2,657 2,657 FY24 1,600 1,600 P&L charge - non underlying contingent consideration FY22 - 5,881
Slide 28: Reconciliation of underlying to statutory measures – PBT
Reconciliation of underlying to statutory measures – PBT Underlying profit before tax (£,000) FY 2021 FY 2020 Profit before tax 5,509 4,058 Amortisation on acquired intangibles 2,622 1,427 Non-underlying operating costs 10,288 8,090 Non-underlying finance costs - 41 Underlying profit before tax 18,4
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) FY 2021 FY 2020 Loss / Profit after tax 3,402 1,820 Amortisation on acquisition related 2,622 1,427 intangibles Non-underlying operating costs 10,288 8,090 Non
Slide 30: Cyber Security
Cyber Security Robust defences and awake to the reality that no-one is immune from risk • Robust defences by design • Our single, centralised systems and remote desktop design minimises risk. eg. Data not held on laptops • We use leading edge cyber defence technology (eg. Forticlient, Sophos, Mimeca
Slide 31: ESG Strategy
ESG Strategy Knights (>< Managing our business for ee enum consump the long-term ee ards of corporate and social behaviour and running its operations with high ethical standards. Looking after the Our environment ESG pillars Fostering a diverse, team-based, meritocracy-driven culture and encouraging
Slide 32: ESG Dashboard
ESG Dashboard *Chester and Maidstone offices use 100% 32 renewable electricity
Slide 33: Leadership team
Leadership team PLC Board Gillian Bal Jane Central Davies Johal Pateman management Senior Non Non Exec Non Exec Exec Director Chairman Director Kate David Richard Lewis Beech King Chief Financial Chief Operating Officer CEO Officer Group Sales Recruitment Compliance HR IT Operations Finance 8 Client
Knights Group Holdings — FY2021 Earnings Presentation on 6ix