Knights Group Holdings Plc · LSE:KGH
Knights — H1 FY2024 Earnings Presentation
27 slides from Knights's earnings presentation, January 2024
Slide 1: Half year results
Half year results For the Six Months Ended 31 October 2023 Continued strategic progress supports return to organic growth and improved profitability January 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: Half year overview
Half year overview Increased Diversity of Return to organic underlying EBITDA business provides growth margin resilience Recent acquisitions Senior hires more Normalisation of integrated and than doubled employee churn performing well Knights │ Half year results 3
Slide 4: A resilient, diversified platform
A resilient, diversified platform One of the largest legal and professional services groups outside London Well balanced across services and sectors Commercial mindset and cultural integration driven by Full suite of services strengthened by sector specialisms and non-legal strong operational manage
Slide 5: Half year overview – key financials
Half year overview1 – key financials HY Revenue Underlying EBITDA Underlying EPS2 +6% +25% +21% (organic growth of 3.3%) To To To £75.3m £18.2m 9.99p (HY 2023: £71.2m) (HY 2023: £14.6m) (HY 2023: 8.26p) Net Debt3 Underlying Cash Conversion Period End Lockup4: £38.3m 69% 93 days after c£7.5m of acqui
Slide 6: Robust financial performance
Robust financial performance Summary income statement (£’000) • £4.1m of revenue growth • £2.7m from FY23 and H1 FY24 31 October 31 October acquisitions 2023 2022 • £2.1m organic growth offset by £0.7m impact of HPL disposal in July 2022 Revenue 75,296 71,200 • Gross margin decreased to 47.9% (H1 FY
Slide 7: Revenue bridge (£'m)
Revenue bridge (£’m) 80.0 Acquisition income Organic income 75.0 0.6 (0.7) 4.7 2.1 (2.6) 7.4 70.0 5.4 5.4 65.0 60.0 65.8 67.9 65.8 55.0 50.0 Revenue HY23 FY23 acquisitions Sale of HPL HY24 acquisitions Residential property & All other sectors Revenue HY24 M&A sectors Organic income Acquisition incom
Slide 8: Significant increase in underlying PBT
Significant increase in underlying PBT Underlying PBT Bridge (£’m) 15.0 14.0 (0.3) Strong platform for future profitable growth driven (0.9) by experienced Client 13.0 Services Directors (0.3) 3.6 (0.6) 15.4% 12.0 margin (0.4) 11.0 Prior year acquisitions 10.0 performing well 12.6% 1.5 margin 9.0 11
Slide 9: Key Performance Indicators
Key Performance Indicators Gross profit margin (%) Cash generation – Underlying FCF (£m) 10.0 51.0 9.0 50.0 8.0 49.1 6.1 7.0 5.9 49.0 6.0 48.0 47.9 48.0 5.0 4.0 4.0 47.0 3.0 2.0 46.0 1.0 45.0 0.0 HY22 HY23 HY24 HY22 HY23 HY24 Fees per FTE fee earner (£k) Average number of FTE1 fee earner 80.0 76.3 1
Slide 10: Summary cash flows
Summary cash flows £’000 31 October 2023 31 October 2022 Underlying EBITDA 18,192 14,601 £5.9m Change in working capital (6,244) (6,376) Underlying free cash flow Net Cash outflow for IFRS 16 lease receivables less payments (3,303) (3,626) (HY 2023: £4.0m) Movement in provisions & other sundry items
Slide 11: Industry leading working capital
Industry leading working capital Consistently transformed the Group lockup days continue to progress lockup of acquisitions At At 160 acquisition 31 October 23 142.5 140 197 days 109 days 136 120 131 120 123 Lock-up days 100 109 FY22 151 days 58 days 80 59 59 66 70 60 62 169 days 75 days 40 20 35 35
Slide 12: Usual first half year net debt increase
Usual first half year net debt increase Net debt bridge (£’m) Net debt at 40.0 £38.3m 2.1 £35.6m at 31 October 2022 35.0 2.7 1.5 RCF available 2.1 30.0 0.7 £70m £31.7m headroom 2.5 in current facilities as (5.9) 38.3 at 31 October 2023 25.0 3.4 29.2 1.3x 20.0 leverage 1.6x at 31 October 2022 (covena
Slide 13: Capital allocation
Capital allocation Cash flow Approach Maintaining industry leading debtor Strong cash Existing Highly cash generation 1 business days, leveraging scale and enhancing acquisition cashflows generative Invest in recruitment, Investment in quality people, Organic technology and office 2 growth collabora
Slide 14: Driving sustainable organic growth
Driving sustainable organic growth Attracting and retaining talent Leveraging enhanced scale and reputation for a premium service Acquisitions providing platform for organic growth Knights │ Half year results 14
Slide 15: Attracting and retaining talent: retention
Attracting and retaining talent Greater retention and engagement Supported by • High retention; churn of 6% • Benefits of return to the office in (HY23: 11%) October 2022; enhanced culture, collaboration and development • A further 4 people (FY23: 17) have returned to us following a move to • Improv
Slide 16: Attracting and retaining talent: accelerated growth through hires
Attracting and retaining talent Accelerated growth through hires Supported by • 20 senior fee earners recruited in • Strengthened scale and reputation HY24 (HY23: 9) • Reduced financial risk, corporate • Strong pipeline of high calibre structure becoming more attractive candidates • A more normalise
Slide 17: Leveraging enhanced scale and reputation
Leveraging enhanced scale and reputation Larger client CEO & CSD-led relationship development with larger programme corporates Gaining share of Cross selling / doing more for larger clients legal spend Annual increases from May fully embedded with our Price discipline people Increased breadth of ser
Slide 18: Acquisitions providing platform for organic growth
Acquisitions providing platform for organic growth Case Study - Teesside Complement organic growth with selective, considered acquisitions • Acquired in November 2021 • Fully integrated, delivered c.50% organic growth in HY24 from • St James Law (Newcastle) and Baines pricing and collaborative worki
Slide 19: Summary & current trading
Summary & current trading 1 2 3 Return to organic growth and Diversified capabilities and Healthy pipeline of larger trading in line with client base provide resilience client wins for our premium expectations; delivering service profitable, cash generative growth 4 5 6 Local dominance and Expanded
Slide 20: Appendix
Knights Appendix
Slide 21: Balance sheet
Balance sheet Summary balance sheet 31 October 30 April 31 October £’000 2023 2023 2022 • Reduction in Right of Use assets following assignment and surrender of 3 leases in the period Goodwill & other intangibles 88,615 88,021 88,498 Right of use asset 35,770 38,200 41,822 • Increased trade and othe
Slide 22: Deferred and Contingent consideration
Deferred and Contingent consideration Deferred consideration Contingent consideration Total (£’000) (£’000) (£’000) Accrued at 31 October 2023 3,997 1,567 5,564 Payable at 31 October 2023: FY24 1,225 1,541 2,766 FY25 2,531 2,724 5,255 FY26 293 1,392 1,685 FY27 - 340 340 Total 4,049 5,997 10,046 Non
Slide 23: Organic growth calculation
Organic growth calculation £'000 31 October 2023 31 October 2022 Income pre FY23/ FY24 acquisitions 67,944 65,802 FY 23 acquisition income 5,220 4,705 Organic growth excludes income growth from acquisitions in the year of FY 24 acquisition income 2,132 - their acquisition, and for the first full fin
Slide 24: Reconciliation of fee earner numbers
Reconciliation of fee earner numbers Partner & Senior Other-qualified fee Non-qualified fee Associates earners earners Total fee earners Opening FTE at 1 May 2023 398 250 422 1,070 Acquisition starters (net of any FY23 and FY24 acquisition levers) 11 8 10 29 Re-classification / internal transfer to
Slide 25: Reconciliation of underlying to statutory measures – PBT
Reconciliation of underlying to statutory measures – PBT Underlying profit before tax (£’000) 31 October 2023 31 October 2022 Profit before tax 6,892 4,116 Amortisation (adjusted for amortisation on computer software) 1,794 1,740 Non-underlying operating costs 2,818 3,451 Non-underlying gains on dis
Slide 26: Reconciliation of underlying to statutory measures – PAT and EPS
Reconciliation of underlying to statutory measures – PAT and EPS Underlying profit after tax (£’000) / 31 October 2023 31 October 2022 Underlying earnings per share (pence) Profit after tax 4,579 2,956 Non–underlying tax charge - (260) Amortisation (adjusted for computer software) 1,794 1,740 Non-un
Slide 27: Thank you
Thank you Knights Registered Office The Brampton Newcastle-Under-Lyme Staffordshire ST5 0QW Tel: 0344 371 2562
Knights Group Holdings — H1 FY2024 Earnings Presentation on 6ix