Knights Group Holdings Plc · LSE:KGH
Knights — H1 2025 Earnings Presentation
34 slides from Knights's earnings presentation, January 2025
Slide 1: Half Year Results
Half Year Results For the six months ended 31 October 2024 Continued profitable growth and further margin enhancement January 2025
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: Strong H1 performance, reflecting focus on profitable growth
Strong H1 performance, reflecting focus on profitable growth Supporting confidence in full year in line with expectations Experienced Higher Higher quality quality Strong profit growth leadership team: Operational revenues from revenues from and margin 25excellence directorsandwith expansion strengt
Slide 4: Continuing to build on track record of profitable, cash generative growth
Continuing to build on track record of profitable, cash generative growth Revenue £’m c.5 x Underlying PBT8 £’m c.6 x 180 IPO 35 IPO 165.4 160 30 28.7 150.0 142.1 140 25.3 125.6 25 120 21.6 103.2 20 100 18.4 18.1 80 74.3 15 13.6 60 52.7 10 9.4 >50% 40 34.9 in H1: 4.8 14.6 5 20 0 0 2018 2019 2020 202
Slide 5: Half year overview
Half year overview Profitable growth and margin accretion HY Revenue Underlying PBT8 Underlying PBT8 margin +5.4% +25.9% +300bps (organic growth of 0.7%) To To To £79.4m £14.6m 18.4% (HY 2024: £75.3m) (HY 2024: £11.6m) (HY 2024: 15.4%) Net Debt10 Underlying Cash Conversion5 Period End Lockup11 £50.1
Slide 6: Significant increase in underlying PBT
Significant increase in underlying PBT 8 Underlying PBT Bridge (£’m) -1% pts 18 as % of +6% organic revenue (£2.1m) Gross margin increased 16 by 300bps reflecting 18.4% 0.1 improvement in pricing (0.6) and recovery, along with (0.1) 14 (0.4) (0.3) focus on premium work 4.3 streams and strong cost 15
Slide 7: Revenue bridge (£'m)
Revenue bridge (£’m) Acquisition income Organic income 85.0 80.0 3.0 1.4 0.5 (0.8) 5.7 75.0 2.1 1.8% LFL 70.0 Organic growth 65.0 60.0 73.2 73.7 55.0 50.0 45.0 40.0 Revenue HY24 FY24 acquisitions FY25 acquisitions Strategic reductions All other sectors Revenue HY25 Organic income Acquisition income
Slide 8: Key Performance Indicators
Key Performance Indicators Improved gross profit margin (%) Increased gross profit per FTE1 fee earner (£k) 55 45 41.6 40 50.5 50 35 33.5 48.5 31.8 47.5 30 45 25 HY23 HY24 HY25 HY23 HY24 HY25 Increased fees per FTE1 fee earner (£k) Strong cash generation - Underlying FCF 5 (£m) 85 82.5 8 6.9 80 5.9
Slide 9: Summary cash flows
Summary cash flows 31 October 31 October £'000 2024 2023 Underlying EBITDA13 21,417 18,192 63% Change in working capital (8,388) (6,074) Underlying Cash Conversion5 Cash outflow for IFRS 16 leases (2,957) (3,303) Movement in underlying share based payment charge 445 852 Cash generated from underlyin
Slide 10: Lock-up days
Industry leading debtor days Our unique culture drives cash generation 160 140 Progress reducing lock up days 144 of acquisitions 136 120 131 120 123 At At Lock-up days 100 acquisition 31 October 24 80 215 days 61 days 59 66 70 65 60 62 FY23 40 213 days 93 days 20 35 33 33 31 33 0 HY21 HY22 HY23 HY2
Slide 11: Balance sheet and cash
Balance sheet and cash Net debt10 bridge (£’m) 60 Net debt 2.4 50.1 50 6.2 £50.1m 1.9 £35.2m at 30 April 24 40 2.4 6.4 35.2 2.5 RCF available 30 £100m (6.9) c.£50m headroom in facilities as 20 at 31 October 2024 Covenant leverage 10 1.36x at 31 October 2024 0 (1.1x at 30 April 24) d 4 s aid 4 uir on
Slide 12: Confident in delivering FY expectations and medium-term ambitions
Confident in delivering FY expectations and medium-term ambitions Focus on increasing organic revenue growth and maintaining high profit margins Higher quality Driving revenues, strong operational recovery and excellence & client wins cost discipline Strong Continued performance strong from recent a
Slide 13: Higher quality revenues
Higher quality revenues From a stronger team Focussed on higher Increased Driving organic growth quality teams and gross profit per fee through strong specialisms earner recruitment momentum Growing 23 senior fee earners joined in CL Medilaw, real estate and Coaching higher performance HY (HY24: 20)
Slide 14: Excellent recovery and wins
Excellent recovery and wins Demonstrates value clients attribute to our services Strong reputation, national scale and breadth of offer Strong client relationships Driving new business Positive momentum in new client wins Excellent recovery of rate increases Marketing and brand initiatives Annual ra
Slide 15: Driving operational excellence and cost discipline
Driving operational excellence and cost discipline Sharpened focus across the Group Experienced management team of 25 directors - average tenure of 6 years Maximising Driving organic acquisition Strong cost growth through integration discipline collaboration synergies Regional Streamlining footprint
Slide 16: A compelling platform for legal professionals and vendors
A compelling platform for legal professionals and vendors Well positioned for structural changes in the sector £3.8bn Addressable, highly Attractive proposition for fragmented regional Most compelling acquirer high performing talent legal market of scale in the sector Exit outdated partnership model
Slide 17: Scale and national coverage through value-accretive acquisitions
Scale and national coverage through value-accretive acquisitions In a large, fragmented market where partnership model faces structural pressures Case study: Premium legal services, delivered locally, across the UK Meade King (Bristol) generating higher HY revenue than pre acquisition FY • Acquired
Slide 18: Compounding profit growth model
Compounding profit growth model Supporting medium term ambition to double the size of the business Investing in high quality Organic growth revenue & dividends Leveraging Cash our brand generation and scale Strong (organic & profitability acquisition lock up reduction) Acquisitions Knights │ Half ye
Slide 19: Summary & current trading
Summary & current trading 1 2 3 Operational excellence H2 has begun in line with our Confident in further organic underpinning enhanced full year expectations growth in the second half profitability 4 5 6 Encouraging signs in Breadth, scale and Healthy recruitment and residential property markets re
Slide 20: Appendix
Appendix
Slide 21: Strong profit growth
Strong profit growth Summary income statement (£’000) 31 October 2024 31 October 2023 Revenue 79,414 75,296 Revenue Growth % 5.5% 5.8% • Gross margin increased by 300 bps Direct fee earner costs (38,970) (39,215) reflecting improvement in pricing and Other direct costs (378) (307) recovery, along wi
Slide 22: Balance sheet and liquidity
Balance sheet and liquidity Summary balance sheet 31 October 30 April 31 October £'000 2024 2024 2023 Goodwill and other intangibles 90,877 86,900 88,615 • Increase in goodwill and other intangibles Right of use asset 37,287 34,034 35,770 following the completion of Thursfields acquisition. Investme
Slide 23: Deferred and Contingent consideration
Deferred and Contingent consideration Deferred Contingent consideration consideration Total (£'000) (£'000) (£'000) Accrued at 31 October 2024 2,399 1,601 4,000 Payable at 31 October 2024 FY25 1,251 1,442 2,693 FY26 648 2,681 3,329 FY27 294 1,690 1,984 FY28 294 1,373 1,667 Total 2,487 7,186 9,673 No
Slide 24: Organic growth calculation
Organic growth calculation £'000 31 October 2024 31 October 2023 Organic growth excludes income growth from acquisitions in the year of Income pre HY24 / HY25 acquisitions 73,698 73,164 their acquisition, and for the first full financial year following acquisition, HY24 acquisition income 2,672 2,13
Slide 25: Reconciliation of fee earner numbers
Reconciliation of fee earner numbers Partner & Senior Other-qualified Non-qualified Total Associates professionals professionals Integrar professionals FTE at 1 May 2024 401 247 230 86 964 Acquisition starters (net of any FY24 and FY25 acquisition leavers) 29 13 27 - 69 Re-classification / internal
Slide 26: Reconciliation of underlying to statutory measures – PBT
Reconciliation of underlying to statutory measures – PBT Underlying profit before tax8 (£'000) 31 October 2024 31 October 2023 Profit before tax 8,974 6,892 Amortisation on acquired intangibles 1,869 1,794 Contingent acquisition payments 1,447 1,548 Other non-underlying costs 2,327 1,342 Underlying
Slide 27: Reconciliation of underlying to statutory measures – PAT and EPS
Reconciliation of underlying to statutory measures – PAT and EPS Underlying profit after tax15 (£’000) / Underlying earnings per share9 (pence) 31 October 2024 31 October 2023 Profit after tax 6,135 4,579 Amortisation on acquired intangibles 1,869 1,794 Non-underlying operating costs 3,774 2,890 Tax
Slide 28: 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 29: Capital allocation framework
Capital allocation framework Supporting medium term ambition to double the size of the business 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 requiremen
Slide 30: A robust, scalable platform with a diversified portfolio of services
A robust, scalable platform with a diversified portfolio of services Range of specialisms serving both corporate and individual clients focused on providing a premium service Core legal services offering 30% Real estate 16% Private wealth Expert, multi-sector advice in a broad range of commercial ma
Slide 31: Leadership team
Leadership team Knights │ Half year results 31
Slide 32: 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 33: 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 25 diversified legal and professional Premium national Executive, Client services and Commercial structur
Slide 34: Thank you
Thank you Knights Registered Office The Brampton Newcastle-Under-Lyme Staffordshire ST5 0QW Tel: 0344 371 2562
Knights Group Holdings — H1 2025 Earnings Presentation on 6ix