REG - Knights Group Hldgs - Half Year Results
11/01/2024 07:00
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RNS Number : 3135Z Knights Group Holdings PLC 11 January 2024
Knights Group Holdings plc
("Knights" or the "Group")
Half Year Results
Strong profit growth with a return to organic growth; in line with
expectations
Knights, a fast-growing legal and professional services business in the UK,
today announces its half year results for the six months ended 31 October
2023.
Financial highlights
· Revenue up 6% to £75.3m (H1 FY23: £71.2m), in line with Board
expectations
· Strong growth in underlying EBITDA(1) of 25% to £18.2m (H1 FY23:
£14.6m)
· Reported profit before tax increased by 68% to £6.9m (H1 FY23:
£4.1m)
· Basic underlying EPS(2) up 21% to 9.99p (H1 FY23: 8.26p);
reported Basic EPS up 54% to 5.34p (H1 FY23: 3.46p)
· Debtor days improved to 31 (H1 FY23: 32); lock up(3) improved to
93 days (H1 FY23: 103 days)
· Good cash conversion(4) of 69% (H1 FY23: 57%)
· Net debt(5) of £38.3m, (H1 FY23: £35.6m, FY23: £29.2m) after a
cash outlay of c.£7.5m relating to acquisition consideration and related non
underlying costs
· Interim dividend 1.61p per share (H1 FY23: 1.53p per share)
Strategic and operational highlights
Leveraging our increased scale, strong reputation and differentiated model
· 20 senior fee earners hired in the period, up from nine in H1
FY23
· Significant reduction in staff churn from 11% to 6%
· Grown share of larger client spend
· Pricing strategy embedded, with clients recognising the strong
value of our premium service
· Continued cost discipline, leveraging post-acquisition synergies
and driving efficiencies across the Group
Acquisitions providing a platform for organic growth
· Expanded presence in the North, with acquisitions of St James'
Law in Newcastle and Baines Wilson in Carlisle which have integrated well and
are performing as expected
· Acquisitions providing excellent platforms for organic growth
through recruitment; five partners already hired into each of Bristol (entered
Feb 2023) and Newcastle (entered May 2023)
Board changes
· Appointment of Dave Wilson as non-executive Chairman, bringing
extensive PLC, international board-level and operational experience
Current trading and outlook
· Trading continuing in line with the Board's expectations
· New £70m revolving credit facility agreed in November 2023
· Confident in the resilience of the business and its ability to
attract and retain quality talent and clients, despite macroeconomic pressures
· Focussing on driving organic growth, efficiencies and
strengthening platform for future acquisitions
David Beech, CEO of Knights, commented:
"Knights has delivered a good performance in the period, reflecting our sharp
focus on driving profitability and organic growth and the resilience provided
by our diversified services, capabilities, and client base.
"We are delighted with the strong momentum in recruitment and retention in the
half, which is testament to the attractiveness of our scale, reputation and
model, the efforts of our client service directors, and enhancements we have
made to our employee proposition, benefits and engagement. Together with
improved retention across the business, this influx of high-calibre talent
will underpin organic growth in the future.
"We continue to expand our relationships with larger clients who increasingly
recognise the benefits of Knights' premium, diversified offering and
collaborative, corporatised model.
"Whilst mindful of macroeconomic conditions, trading in the second half is in
line with the Board's expectations and we continue to focus on driving organic
growth and efficiency, providing a strong platform for future acquisitions."
A presentation of the results will be made to analysts and investors at 9.00am
this morning. To register for access, or for any other enquiries, please
contact MHP Group on: Knights@mhpgroup.com (mailto:Knights@mhpgroup.com) .
(1 ) Underlying EBITDA is operating profit before depreciation,
amortisation and non-underlying items (including non-underlying share based
payment expenses).
(2) Underlying PBT is before amortisation of acquired intangibles,
non-underlying costs relating to acquisitions, non-recurring finance costs,
restructuring costs in the reporting period, and non-underlying share based
payments. Underlying EPS excludes these items and the tax related to these
items. The Board believes that these underlying figures provide a more
meaningful measure of the Group's underlying performance.
(3) Lock up is calculated as the combined debtor and WIP days as at a point
in time. Debtor days are calculated on a count back basis using the gross
debtors at the period end and compared with total fees raised over prior
months. WIP days are calculated based on the gross work in progress (excluding
that relating to clinical negligence claims, insolvency, and ground rents, as
these matters operate mainly on a conditional fee arrangement and a different
profile to the rest of the business) and calculating how many days billing
this relates to, based on average fees (again excluding clinical negligence
claims, insolvency, and ground rents fees) per month for the last 3 months.
Lock up days excludes the impact of acquisitions in the last quarter of the
reporting period.
(4 ) Cash conversion is calculated as the total of net cash from operations,
tax paid and payments of lease interest and lease finance liabilities under
IFRS 16, divided by the underlying profit after tax, which is calculated from
profit after tax by adding back amortisation of acquired intangibles,
non-underlying costs relating to acquisitions, non-recurring finance costs,
restructuring costs in the reporting period, and non-underlying share based
payments and the tax in respect of these costs.
(5 ) Net debt includes cash and cash equivalents, borrowings and acquired
debt but excludes lease liabilities.
These footnotes apply throughout the RNS.
Enquiries
Knights
David Beech, CEO Via MHP
Numis (Nomad and Broker)
Stuart Skinner, Kevin Cruickshank 020 7260 1000
MHP (Media enquiries)
Katie Hunt, Eleni Menikou, Rob Collett-Creedy 020 3128 8100
+44 (0)7884 494112
knights@mhpgroup.com
Notes to Editors
Knights is a legal and professional services business, ranked within the UK's
top 50 largest law firms by revenue. Knights was one of the first law firms in
the UK to move from the traditional partnership model to a corporate structure
in 2012 and has since grown rapidly. Knights has specialists in all key areas
of corporate and commercial law so that it can offer end-to-end support to
businesses of all sizes and in all sectors. It is focussed on key UK markets
outside London and currently operates from 23 offices located in Birmingham,
Brighton, Bristol, Carlisle, Cheltenham, Chester, Exeter, Kings Hill, Leeds,
Leicester, Lincoln, Manchester, Newbury, Newcastle-upon-Tyne, Nottingham,
Oxford, Portsmouth, Sheffield, Stoke, Teesside, Weybridge, Wilmslow and York.
Chief Executive's Review
Introduction
The Group has performed in line with the Board's expectations in the first
half, with a return to organic revenue growth and strong growth in profits, as
we continue to execute our strategy by focusing on growth in underlying
EBITDA.
Underlying EBITDA increased by 25% to £18.2m, reflecting an increase in
underlying EBITDA margin to 24.2% (H1 FY23: 20.5%) driven by an increase in
interest receivable on client monies of £3.8m. Underlying PBT also
increased by 29% to £11.6m, compared to the prior half year period, resulting
in an increase in underlying PBT margin from 12.6% to 15.4%.
Revenue increased by 6% to £75.3m, delivering overall organic growth of 3.3%
(0.4% H1 FY23). Pleasingly, excluding the more cyclical residential property
and corporate work, the business achieved 9% organic growth, demonstrating a
resilient performance from Knights' diversified range of specialisms serving a
broad spectrum of sectors. Growth in non-cyclical markets, particularly
Private Wealth, Dispute Resolution and our growing regulatory team, helped to
offset the impact of the subdued housing and corporate M&A markets.
We are creating greater momentum in the business, driven by a return to
working in our offices, improving pricing and cost discipline, by securing a
greater share of our clients' spend, and through the attraction and retention
of talent, as we leverage our greater size and growing reputation.
Our prior year acquisitions, Coffin Mew, Meade King and Globe Consultants are
performing as expected given the current macro-economic conditions, and the
first half acquisitions of St James Law and Baines Wilson have integrated to
plan, consolidating our coverage across most of England, outside the capital.
We have maintained our disciplined approach to cash collection, resulting in
debtor days of 31 as at 31 October 2023 (31 October 2022: 32 days, 30 April
2023: 30 days), with total lock-up improving to 93 days compared to 103 days
at 31 October 2022 and 87 days as at 30 April 2023.
This focus on cash has resulted in net debt of £38.3m at 31 October 2023 (H1
FY23: £35.6m, FY23: £29.2m), after £7.5m of acquisition consideration, debt
and related costs in the first half, providing significant headroom against
the Group's recently increased £70m revolving credit facility. Although
this represents an increase in net debt from the balance as at 30 April 2023,
this is principally due to payment of consideration for current and prior year
acquisitions and first half weighting of certain payments such as dividends,
corporation tax and other overheads.
As we are building a national business with a strong reputation for providing
a premium service, our near-term focus is on driving organic growth through
attracting and retaining high calibre people, pricing our services for the
high value we deliver, and providing more services to our larger clients, all
supported by greater capability, consistency and efficiency across the
business.
A more favourable market for attracting and retaining talent
We are attracting high calibre talent to Knights due to our increasing size
and reputation and our differentiated ownership and business model, which
offers an attractive alternative to the financial commitment and risk
associated with traditional equity partnership-style models.
We recruited 20 senior fee earning professionals in the first half, compared
to nine in the same period last year, by focusing more of our resources on
recruitment, with our Client Services Directors becoming more engaged in our
recruitment strategy.
Importantly, we have also seen churn reduce significantly, to six percent,
compared with 11% for the same period last year, meaning that our higher
levels of recruitment will have a greater positive impact on our organic
growth. Although assisted by market conditions, we have also introduced our
employee value proposition alongside an upgraded employee benefits package and
regular regional conferences, all of which enhances our employee experience
and increases our retention levels. Our decision to return to office-based
working a year ago is also paying dividends in terms of creating stronger
cultural cohesion, people being able to work together more seamlessly, and
better development opportunities for the less experienced members of our team.
Leveraging the clear value our premium service delivers at scale
Having invested in scaling up our business considerably in recent years while
establishing greater awareness of our brand and differentiated offering, and
having built a strong reputation for high quality service delivered
consistently nationally, we have focussed primarily on leveraging this
platform during the first half.
We started to benefit from the Group's pricing strategy in the first half,
with a pricing increase implemented from May 2023 now embedded within our
people and across all new client engagements. We have been encouraged by the
traction this has gained, without adverse impact on relationships as clients
continue to recognise the strong value Knights delivers through its premium
service without a London cost base.
We have also continued to grow our share of the spend by our larger clients.
Our unique way of working together as one collaborative team across our 23
offices is becoming deeply embedded within our culture. Our approach to the
delivery of client services, led by 275 Partners who are always available to
clients without the distraction of managing a business, is gaining momentum
and awareness in the business and private wealth sectors.
Driving consistency and efficiency across the business
We have always managed costs tightly as part of our model, and there are a
number of areas where we have continued to drive efficiencies during the first
half, whilst also ensuring our professionals are consistently well supported
across the business.
For instance, we have moved to a more centralised platform for HR and
compliance, resulting in cost savings. We also continue to leverage
post-acquisition synergies, continuing to review our property portfolio and
making changes where appropriate to crystalise other savings, such as the cost
of professional indemnity insurance.
We will continue to drive efficiencies and the consistent streamlining of
processes across the business to retain tight control of costs.
Board
As previously announced, Dave Wilson was appointed as non-executive Chair of
the Board on 15 November 2023, bringing with him over 30 years' international,
board-level and operational experience. He previously spent 12 years in senior
roles, including as Deputy Chief Executive Officer at AIM-listed GB Group Plc,
during which time that business grew both organically, and through the
successful completion of 14 acquisitions, scaled from a market cap of £14
million to £1.8 billion. He is also currently non-executive Chair of
AIM-listed media group, LBG Media Plc, and a non-executive director of
musicMagpie Plc.
Bal Johal stepped down from the Board at the same time, having served as
non-executive Chair of Knights since 2012. On behalf of the Board, I reiterate
our thanks to him for his immense contribution to the business over the past
11 years, during which time the Group has seen significant growth.
Acquisitions
The integration of prior year acquisitions, Coffin Mew (Portsmouth), Meade
King (Bristol) and Globe Consultants Limited (Lincoln), has been successful
and all are performing well, despite challenging market conditions for the
residential property sector in the period.
During the first half, the Group completed the acquisition of St James Law
(Newcastle) and Baines Wilson (Carlisle), further strengthening the Group's
presence in the North. St James Law brought to the Group an independent full
service commercial law firm based in Newcastle, and Baines Wilson brought one
of the leading independent law firms in the North West, offering Corporate,
Real Estate, Dispute Resolution and Employment services.
Both businesses have integrated well and are performing in line with the
Board's expectations.
Our acquisitions in Bristol and Newcastle, in particular, provide excellent
platforms for further organic growth through the recruitment of professionals
in those key regional markets for professional services, and we have already
hired five partners in each of these new locations.
New and extended £70m Revolving Credit Facility agreed
In November, we announced a new, extended revolving credit facility providing
total committed funding of £70m until November 2026, split between HSBC UK,
AIB (GB) and NatWest, replacing the former £60m facility. This provides the
Group with the headroom and flexibility to continue to execute our strategy,
scale our business and accelerate organic growth, complemented by selective
acquisitions.
Dividend
The Group's dividend policy balances the retention of profits to fund our
long-term growth strategy with providing shareholders with a return as our
growth strategy delivers strong results. In line with that policy, the Board
is proposing an interim dividend of 1.61p per share (HY23 1.53p), an increase
of 5%. The dividend will be payable on 15 March 2024 to shareholders on the
register at 16 February 2024.
Current trading and outlook
The Group has continued to trade in line with the Board's expectations in the
second half as we execute on our strategy which is delivering profitable, cash
generative growth.
Whilst mindful of the current macroeconomic environment, we are encouraged
that we are attracting and retaining high quality, talented professionals,
have a healthy pipeline of opportunities with new and existing larger clients
for our premium service, and that our diversified services, capabilities, and
client base provide resilience. We will continue to focus on driving organic
growth and efficiency in the second half, providing a strong platform for
further future acquisitions.
David Beech
CEO
Financial Review
I am pleased to report that for the first half of this year the Group has
delivered strong growth in underlying EBITDA of 25% to £18.2m (H1 FY23:
£14.6m), good cash conversion(4) and a net debt position in line with the
Board expectations.
6 months ended 31 October 2023 6 months ended 31 October 2022 % change
£'000 £'000
Revenue 75,296 71,200 6%
Other operating income 5,471 1,874 192%
Staff costs (47,825) (43,935) 9%
Impairment of trade receivables and contract assets (131) (306) (57%)
Other operating charges (14,619) (14,232) 3%
Underlying EBITDA 18,192 14,601 25%
Underlying EBITDA % 24.2% 20.5%
Depreciation and finance charges under IFRS 16 (3,567) (3,559) -
Other Depreciation and amortisation charges (excluding amortisation on (1,514) (1,198) 26%
acquired intangibles)
Other Finance charges (1,535) (855) 80%
Underlying profit before tax 11,576 8,989 29%
Underlying profit before tax margin 15.4% 12.6%
Underlying tax charge (excluding impact of non-recurring deferred tax) (3,004) (1,938) 55%
Underlying profit after tax 8,572 7,051 22%
Basic underlying EPS (pence) 9.99 8.26 21%
15.4%
12.6%
Underlying tax charge (excluding impact of non-recurring deferred tax)
(3,004)
(1,938)
55%
Underlying profit after tax
8,572
7,051
22%
Basic underlying EPS (pence)
9.99
8.26
21%
Revenue
Reported revenue for the period is £75.3m, compared to £71.2m for the same
period last year, an increase of 6%. Of this increase £2.1m related to
growth in organic revenues of 3.3%; £2.1m related to H1 FY 24 acquisitions
and £0.6m represented the increase in revenues from FY 23 acquisitions over
the comparable period of ownership in the prior year. The disposal of HPL in
July FY23 has resulted in a £0.7m decrease in revenue compared to the same
period last year.
Revenue from acquisitions
Acquisitions completed during FY23
The acquisitions of Globe Consultants, Meade King and Coffin Mew completed
during FY23. All acquisitions are well integrated and other than Coffin Mew,
which has been adversely impacted by the downturn in the housing market, the
acquisitions are currently performing ahead of expectations, taking into
account the anticipated retention of 80% of revenues post-acquisition. As
expected, these acquisitions have provided good opportunities for organic
growth with good recruitment into these acquired offices in H1 FY24 which will
contribute towards organic growth in H2 FY24 and beyond.
Acquisitions completed during the period to 31 October 2023
In the period to 31 October 2023, we acquired Baines Wilson and St James
Law. These acquisitions have integrated well and are performing as
expected. Again, these acquisitions are providing good opportunities for
recruitment.
Organic growth
We are pleased to report a return to organic growth in the period, of 3.3%.
Excluding the macro-economic impact of the increased cost of debt on the
housing market (a 20% reduction) and corporate transactions (a 15% reduction),
organic growth was 9.5%. Strong growth in non-cyclical areas of the business
such as Private Wealth and Dispute Resolution, and our growing regulatory team
has contributed to the growth as a result of improved pricing and quality of
work undertaken due to our increased scale.
Employee costs
Total staff costs as a percentage of revenue were 63.5% for H1 FY24 (H1 FY23:
61.7%). The increase in staff costs reflected an increase in both direct and
indirect staff costs. We have invested in new senior recruits to drive future
growth (35 senior recruits in H2 FY23 and H1 FY24) who typically take 6-9
months to generate expected run rate revenue, together with investment in
additional client service directors leaving the Group well positioned for
growth going forward.
Other operating charges
Other operating charges have decreased slightly to 19.4% of revenue H1 FY24
(H1 FY23: 20.0%). We continue to drive efficiencies from the cost base,
including from acquisitions whilst continuing to invest in growth.
Other operating income
Other operating income has increased by £3.6m to £5.5m from H1 FY23 to H1
FY24, as a result of increased interest income arising from interest earned on
client monies net of monies paid out to clients. As a large Group consistently
handling significant amounts of client monies, we are able to attract a higher
level of interest than individual clients could achieve on an individual
instant access account. This results in a net benefit to the Group, with
approximately 15% of interest received being paid out to clients, which
typically equates to what they would receive in an instant access account.
Underlying EBITDA(1)
Underlying EBITDA excludes non-underlying operating costs which consist of
transaction costs in relation to acquisitions, contingent consideration and
one-off restructuring and professional costs incurred mainly as a result of
the streamlining of the support function in relation to acquisitions or
strategic reorganisations. The Board considers this to be a key metric to
measure business performance.
During the period, underlying EBITDA increased by £3.6m to £18.2m (H1 FY23:
£14.6m) representing an increase in margin to 24.2% (H1 FY23: 20.5%),
benefitting from an increase in the net interest earned on client monies in
the period, partly offset by increased staff costs as a percentage of revenue.
IFRS 16 depreciation and finance charges
The IFRS 16 rental and finance charges reflects the accounting charge in
respect of all leases with a term of over one year. The total costs in the
half year are comparable to the same period prior year, as the Group continues
to leverage its property costs.
Depreciation and amortisation charges
The increased charge from £1.2m in H1 FY23 to £1.5m in H1 FY24 is due to
continued investment in systems and investment in property
upgrades/refurbishment to support growth.
Finance charges
Finance charges, excluding lease interest, increased by £0.6m in the period,
to £1.5m (H1 FY23: £0.9m) driven mainly by the higher level of UK interest
rates.
Underlying Profit Before Tax(2)
Underlying profit before tax excludes amortisation of acquired intangibles,
transaction and onerous lease costs in relation to acquisitions, contingent
consideration and one off restructuring and professional costs incurred mainly
as a result of the streamlining of the support function in relation to
acquisitions or strategic reorganisations.
Underlying profit before tax has been calculated as an alternative performance
measure to provide a more meaningful measure and to aid comparison of the
profitability of the underlying business to prior periods.
6 months ended 31 October 2023 6 months ended 31 October 2022
£'000 £'000
Profit before tax 6,892 4,116
Amortisation (excluding computer software) 1,794 1,740
Non-underlying costs 2,890 3,133
Underlying profit before tax 11,576 8,989
The Group's underlying profit before tax has increased by 29% to £11.6m (H1
FY23: £9.0m).
The underlying profit before tax margin has increased to 15.4% compared to
12.6% in the prior period, benefitting from an increase in the EBITDA margin,
offset by an increase in interest payable.
Reported Profit Before Tax
The reported profit before tax in the period has increased by 68% to £6.9m
(H1 FY23: £4.1m) driven by an increase in the underlying profit before tax
and a reduction in the level of non-underlying charges in the period.
Taxation
The corporation tax charge for the period was £2.3m (H1 FY23 (£1.2m) giving
an increased effective rate of tax of 33% (H1 FY23 29%) primarily reflecting
the increase in the corporation tax rate from 19% to 25% in the period.
The effective rate of tax on the underlying profit of the business was 26% (H1
FY23 22%)
Earnings per Share (EPS)
Basic EPS in the period increased by 54% to 5.34p (H1 FY23: 3.46p per share).
Taking account of the dilutive impact of potential share options, the basic
Diluted EPS has increased by 51% or 1.76p per share to 5.21p per share (H1
FY23: 3.45p).
To provide a comparison year on year excluding one off items, underlying
EPS(2) has also been calculated giving an increase of 21% to 9.99p per share
(H1 FY23: 8.26p per share). The weighted average number of shares used to
calculate the undiluted EPS for the half year was 85,816,798 (H1 FY23:
85,382,872).
Dividend
In line with the Group's progressive dividend policy, and to reflect the
improved performance of the Group, balanced with the Board's commitment to
continue to reinvest the profits of the Group to fund future strategic growth
plans, the Board has declared an interim dividend of 1.61p per share (H1 FY23
1.53p per share). This will be payable on 15 March 2024 to shareholders on
the register on 16 February 2024.
Balance Sheet
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Goodwill and Intangible assets 88,615 88,498 88,021
Right of use assets 35,770 41,822 38,200
Working capital 57,185 50,485 48,404
Other net liabilities (962) (3,231) (2,833)
Lease liabilities (42,223) (47,704) (44,916)
138,385 129,870 126,876
Cash and cash equivalents 6,333 4,374 4,045
Borrowings (44,620) (39,931) (33,265)
Net debt (38,287) (35,557) (29,220)
Deferred consideration (3,997) (6,018) (4,849)
Net assets 96,101 88,295 92,807
The Group's net assets increased by £3.3m from £92.8m as at 30 April 2023 to
£96.1m as at 31 October 2023, primarily due to profits generated in the
period and credits in relation to share based payments during the period, less
the dividend paid in respect of the year ended 30 April 2023 of £2.1m.
Working capital and cash management
31 October 2023 31 October 2022 30 April 2023
£'000 £'000 £'000
Contract assets 43,587 38,335 38,215
Trade and other receivables 30,516 30,671 31,087
Corporation tax receivable 1,239 427 152
Total current assets 75,342 69,433 69,454
Trade and other payables (17,949) (18,714) (20,832)
Contractual liabilities (208) (234) (218)
Total current liabilities (18,157) (18,948) (21,050)
Net working capital 57,185 50,485 48,404
Net working capital has increased to £57.2m as at 31 October 2023 (31 October
2022: £50.5m). The key driver behind this is a £5.3m increase in the level
of contract assets at the period end compared to the comparative period last
year, primarily due to a £1.2m increase in WIP from acquisitions post 1
November 2022 and an increase in the contract assets within our CL Medilaw
business (£3.8m increase), due to continued growth in this area.
The management of lock up(3) continues to be a fundamental KPI for the Group
and is a key focus for the Board, Client Service Directors and the wider
management team. As at 31 October 2023 lock up was 93 days (31 October 2022:
103 days) broken down as 31 debtor days and 62 WIP days (31 October 2022: 32
debtor days and 71 WIP days). Due to the disproportionate amount of time
that it takes to conclude certain work types such as our CL Medilaw and
Insolvency matters these worktypes are excluded from our WIP days calculation
so as not to deter the majority of the business from focussing on achieving
its excellent lock up days. If WIP days were calculated including all WIP of
the Group this would give WIP days of 105 days and hence a total lock up with
no exclusions of 136 days as at 31 October 2023 (31 October 2022: 131 days).
Cash Flow
6 months ended 31 October 2023 6 months ended 31 October 2022
£'000
£'000
Underlying EBITDA 18,192 14,601
Change in working capital (6,244) (6,376)
Cash outflow for IFRS 16 leases (3,303) (3,626)
Movement in provisions and underlying share based payment charge 1,022 (134)
Cash generated from underlying operations (pre tax) 9,667 4,465
Tax paid (3,754) (415)
Net cash generated from underlying operating activities 5,913 4,050
Underlying profit after tax 8,572 7,051
Underlying cash conversion(4)
69%
57%
Cash generation continues to be a key focus for the management team. As a
result of the continued focus on this and specifically the management of lock
up, the Group generated underlying operating cashflows of £5.9m during the
period, a conversion rate of 69% on underlying profits. This good cash
generation in the period has resulted in net debt of £38.3m as at 31 October
2023 (30 April 2023: £29.2m) after a cash outlay of c.£7.5m relating to
acquisition consideration and related non underlying costs.
The increase in corporation tax paid in the period compared to the comparable
period last year is due to the expected increase in profitability of the
Group, an increase in corporation tax rates from 19% to 25% and the payment in
H1 23 being reduced due to an opening debtor of £1.8m as at the start of the
year.
The table below shows a reconciliation of the key cash flow movements
impacting the movement in net debt.
Net Debt(5)
£'000
Net debt as at 30 April 2023 29,220
Other net cash (inflows) from operating activities (5,913)
Deferred and contingent consideration paid 3,396
Consideration paid for acquisitions in the year (including acquired debt and 2,549
cash)
Acquired debt 642
Non-underlying costs paid 2,053
Interest on borrowings 1,535
Dividends paid 2,144
Capital expenditure 2,661
Net debt as at 31 October 2023 38,287
On 7 November 2023 we renewed and extended our RCF facility to £70m,
committed until November 2026. The Group has £31m headroom in the RCF
facility as at 31 October 2023 (and is well within its key covenants). For
banking purposes our leverage as at 31 October 2023 was 1.3 times EBITDA (as
defined for covenant purposes) Interest is payable on the loan at a margin of
between 1.65% and 2.55% above Sonia dependent on leverage.
The Group is, therefore, in a strong financial position with the headroom and
flexibility to continue to execute our growth strategy.
Kate Lewis
CFO
Knights Group Holdings plc
Consolidated Statement of Comprehensive Income
For the 6 month period ended 31 October 2023
Note 6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Revenue 75,296 71,200 142,080
Other operating income 5,471 1,874 6,718
Staff costs 3 (47,825) (43,935) (88,412)
Depreciation and amortisation charges 4 (6,162) (5,746) (11,616)
Impairment of trade receivables and contract assets (131) (306) (468)
Other operating charges 5 (14,619) (14,232) (26,539)
Operating profit before non-underlying charges 12,030 8,855 21,763
Non-underlying operating costs 6 (2,818) (3,451) (6,791)
Non-underlying gains on disposal 6 - 318 318
Operating profit 9,212 5,722 15,290
Finance costs 7 (2,280) (1,624) (3,661)
Finance income 8 32 18 52
Non-underlying finance costs 6 (72) - (152)
Profit before tax 6,892 4,116 11,529
Taxation (2,313) (975) (3,175)
Non-underlying tax charge - (185) (410)
Profit and total comprehensive income for the period attributable to equity 4,579 2,956 7,944
owners of the parent
Earnings per share Pence Pence Pence
Basic earnings per share 9 5.34 3.46 9.28
Diluted earnings per share 9 5.21 3.45 9.19
Knights Group Holdings plc
Consolidated Statement of Financial Position
As at 31 October 2023
31 October 2023 31 October 2022 30 April 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Assets
Non-current assets
Intangible assets and goodwill 88,615 88,498 88,021
Property, plant and equipment 11,750 10,327 10,004
Right-of-use assets 35,770 41,822 38,200
Finance lease receivables 1,509 967 1,671
137,644 141,614 137,896
Current assets
Contract assets 43,587 38,335 38,215
Trade and other receivables 30,516 30,671 31,087
Finance lease receivables 320 161 315
Corporation tax asset 1,239 427 152
Cash and cash equivalents 6,333 4,374 4,045
81,995 73,968 73,814
Total assets 219,639 215,582 211,710
Equity and liabilities
Equity
Share capital 171 172 171
Share premium 75,262 75,262 75,262
Merger reserve (3,506) (3,536) (3,506)
Retained earnings 24,174 16,397 20,880
Equity attributable to owners of the parent 96,101 88,295 92,807
Non-current liabilities
Lease liabilities 36,917 41,561 38,585
Borrowings 394 39,720 33,076
Deferred consideration 1,502 3,669 2,482
Deferred tax 8,101 8,068 8,388
Provisions 4,141 4,600 4,090
51,055 97,618 86,621
Current liabilities
Lease liabilities 5,306 6,143 6,331
Borrowings 44,226 211 189
Trade and other payables 17,949 18,712 20,832
Deferred consideration 2,495 2,349 2,367
Contract liabilities 208 234 218
Provisions 2,299 2,020 2,345
72,483 29,669 32,282
Total liabilities 123,538 127,287 118,903
Total equity and liabilities 219,639 215,582 211,710
Knights Group Holdings plc
Consolidated Statement of Changes in Equity
For the 6 month period ended 31 October 2023
Attributable to equity holders of the Parent
Share capital Share premium Merger reserve Retained earnings £'000 Total
£'000
£'000
£'000
£'000
Balance at 1 May 2022 (audited) 169 74,264 (3,536) 14,762 85,659
Profit for the period and total comprehensive income - - - 2,956 2,956
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - 428 428
Issue of shares 3 998 - - 1,001
Dividends (1,749) (1,749)
Balance at 31 October 2022 (unaudited) 172 75,262 (3,536) 16,397 88,295
Profit for the period and total comprehensive income - - - 4,988 4,988
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - 837 837
Issue of shares (1) - - - (1)
Transfer - - 30 (30) -
Dividends (1,312) (1,312)
Balance at 30 April 2023 (audited) 171 75,262 (3,506) 20,880 92,807
Profit for the period and total comprehensive income - - - 4,579 4,579
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - 859 859
Dividends - - - (2,144) (2,144)
Balance at 31 October 2023 (unaudited) 171 75,262 (3,506) 24,174 96,101
Knights Group Holdings plc
Consolidated Statement of Cash Flows
For the 6 month period ended 31 October 2023
Note 6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Operating activities
Cash generated from operations 11 12,970 8,090 29,431
Non-underlying operating costs paid 6 (2,053) (1,243) (3,142)
Tax paid (3,754) (415) (2,424)
Contingent acquisition payments (2,229) (1,368) (3,870)
Net cash from operating activities 4,934 5,064 19,995
Investing activities
Acquisition of subsidiaries (net of cash acquired) (1,888) (5,135) (6,018)
Purchase of intangible fixed assets (25) (43) (71)
Purchase of property, plant and equipment (2,835) (1,033) (1,853)
Proceeds from sale of property, plant and equipment - (2) -
Proceeds from lease receivables 188 57 237
Disposal of subsidiaries (net of cash disposed) - 747 1,068
Landlord capital contribution 225 - -
Associated lease costs (26) - -
Payment of deferred consideration (1,167) - (1,210)
Net cash used in investing activities (5,528) (5,409) (7,847)
Financing activities
Proceeds of new borrowings 15,450 22,500 34,425
Repayment of borrowings (4,650) (15,721) (33,900)
Repayment of debt acquired with current year subsidiaries (661) (35) (256)
Repayment of debt acquired with prior year subsidiaries (86) - (438)
Repayment of lease liabilities (2,747) (2,829) (5,439)
Interest and other finance costs paid (2,280) (1,674) (3,661)
Dividends paid (2,144) (1,749) (3,061)
Net cash from/(used in) financing activities 2,882 492 (12,330)
Net increase/(decrease) in cash and cash equivalents 2,288 147 (182)
Cash and cash equivalents at the beginning of the period 4,045 4,227 4,227
Cash and cash equivalents at end of period (note 12) 6,333 4,374 4,045
Knights Group Holdings plc
Notes to the Consolidated Interim Financial Statements
For the 6 month period ended 31 October 2023
1. General Information
Knights Group Holdings plc ("the Company") is a public company limited by
shares and is registered, domiciled and incorporated in England (registration
no. 11290101).
The Group consists of Knights Group Holdings plc and all of its subsidiaries.
The principal activity and nature of operations of the Group is the provision
of legal and professional services. The address of its registered office is:
The Brampton
Newcastle-under-Lyme
Staffordshire
ST5 0QW
2. Accounting policies
2.1 Basis of preparation
The accounting policies used in the preparation of the interim financial
information for the six months ended 31 October 2023 are in accordance with
the recognition and measurement criteria of UK-Adopted International
Accounting Standards and are consistent with those which will be adopted in
the annual statutory financial statements for the year ending 30 April 2024.
The Group's statutory financial statements for the year ended 30 April 2023,
prepared under UK-adopted International Accounting Standards, have been filed
with the Registrar of Companies. The auditor's report on those financial
statements was unqualified and did not contain a statement under Section
498(2) or (3) of the Companies Act 2006. This interim financial information
was approved by the board on 10 January 2024.
The financial statements contained in this interim report do not constitute
statutory accounts as defined in section 434 of the Companies Act 2006.
The interim report has not been audited or reviewed in accordance with the
International Standard on Review Engagements (UK) 2410 issued by the Financial
Reporting Council.
Monetary amounts are presented in sterling, being the functional currency of
the Group, rounded to the nearest thousand except where otherwise indicated.
2.2 Going concern
The interim financial information has been prepared on a going concern basis
as the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. The
Group has a strong trading performance, generates strong operating cashflows
and has recently renewed and increased its banking facilities from
£60,000,000 to £70,000,000, available until 7 November 2026. The Group's
forecasts show sufficient cash generation and headroom in banking facilities
and covenants by comparison to anticipated future requirements to support the
Directors' conclusions that the assumption of the going concern basis of
accounting in preparing the interim financial information is appropriate.
The Group continues to trade profitably and cash generation at an operating
cashflow level has remained strong and in line with expectation. In order to
satisfy the validity of the going concern assumption, a number of different
trading scenarios including a reduction in revenues and costs and an increase
in interest rates and lock up have been modelled and reviewed. Some of these
scenarios forecast a significantly more negative trading performance than is
expected. In all of these scenarios the Group remained profitable and with
significant headroom in its cash resources for the 12 months from the date of
approval of this interim financial information.
2.3 Accounting developments
There have been no new standards or interpretations relevant to the Group's
operations applied in the interim financial information for the first time.
3. Staff costs
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Employee costs 46,973 43,517 87,164
Share-based payment charge 852 418 1,248
47,825 43,935 88,412
4. Depreciation and amortisation charges
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Depreciation 1,463 1,143 2,364
Depreciation of right-of-use assets 2,854 2,808 5,706
Amortisation 1,845 1,793 3,544
Loss on disposal of property, plant and equipment - 2 2
6,162 5,746 11,616
5. Other operating charges
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Establishment costs 3,900 3,573 6,888
Short term and low value lease costs 147 132 302
Other overhead expenses 10,572 10,527 19,349
14,619 14,232 26,539
6. Non-underlying operating costs
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Redundancy and reorganisation staff costs 318 584 1,359
Transaction costs 762 585 953
Onerous short life asset leases - (13) -
Impairment of right-of-use assets 153 38 38
Profit on disposal of right-of-use assets (54) - -
Loss/(profit) on disposal of intangible assets and property, plant and 84 (12) (12)
equipment
Effective interest on deferred consideration - 28 -
Share based payment charges 7 11 17
Contingent consideration treated as remuneration 1,548 2,230 4,436
2,818 3,451 6,791
Non-underlying gains on disposal - (318) (318)
Non underlying finance costs 72 - 152
2,890 3,133 6,625
Non-underlying costs cash movement
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Non-underlying operating costs 2,890 3,133 6,625
Adjustments for:
Contingent consideration shown separately (1,548) (2,230) (4,436)
Non cash movements:
Share based payment charge (7) (11) (17)
Impairment of right of use assets (153) (38) (38)
Profit on disposal of investments - 318 318
Profit on disposal of right of use assets 54 - -
(Loss)/profit on disposal of property, plant and equipment (84) 12 12
Effective interest on deferred consideration - (28) -
Onerous leases - 13 -
Accrual - 74 218
Non-underlying finance costs (72) - (152)
Additional cash movements:
Rental payments on onerous leases 335 - 543
Service charge payments on onerous leases 48 - 92
Receipt for sale of HPL fixed assets - - (24)
Payment of dilapidation provisions 590 - -
2,053 1,243 3,141
Non-underlying costs relate to redundancy costs to streamline the support
function of the Group following acquisitions, transaction costs in respect of
acquisitions, impairment and lease surrender costs as a result of
restructuring following acquisitions, onerous lease costs in respect of
acquisitions, disposals of acquired assets and share based payment charges
relating to one off share schemes offered to employees as part of the IPO and
on acquisitions. On 5 July 2022 the group disposed of Home Property Lawyers
Limited, a former subsidiary of the Group, this was sold for a total
consideration of £1,276,000 with a profit on disposal of £318,000. The
profit on disposal was recognised within non-underlying costs.
Contingent consideration is included in non-underlying costs as it represents
payments which are contingent on the continued employment of those individuals
with the Group, agreed under the terms of the sale and purchase agreements
with vendors of certain businesses acquired. The payments extend over periods
of one to three years and are designed to preserve the value of goodwill and
customer relationships acquired in the business combinations. IFRS requires
such arrangements to be treated as remuneration and charged to the Statement
of Comprehensive Income. The individuals also receive market rate salaries for
their work, in line with other similar members of staff in the Group. The
contingent earnout payments are significantly in excess of these market
salaries and would distort the Group's results if not separately identified.
7. Finance costs
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Interest on borrowings 1,535 855 2,135
Interest on leases 745 769 1,526
2,280 1,624 3,661
8. Finance income
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Lease interest receivable 32 18 52
9. Earnings per share
Basic and diluted earnings per share have been calculated using profit after
tax and the weighted average number of ordinary shares in issue during the
period.
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023 (Audited)
(Unaudited) (Unaudited) Number
Number Number
Weighted average number of ordinary shares for the purposes of basic earnings 85,816,798 85,382,872 85,597,833
per share
Effect of dilutive potential ordinary shares:
Share options 2,075,973 230,569 878,031
Weighted average number of ordinary shares for the purposes of diluted 87,892,771 85,613,441 86,475,864
earnings per share
£'000 £'000 £'000
Profit after tax 4,579 2,956 7,944
Earnings per share Pence Pence Pence
Basic earnings per share 5.34 3.46 9.28
Diluted earnings per share 5.21 3.45 9.19
Underlying profit after tax (PAT) and adjusted per share (EPS)
Underlying PAT and EPS are presented as alternative performance measures to
show the underlying performance of the Group excluding the effects of
amortisation of intangible assets, share-based payments and non-underlying
items.
6 months ended 6 months ended Year ended
31 October 2023 31 October 2022 30 April 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit after tax 4,579 2,956 7,944
Non-underlying tax charge - (260) 410
Amortisation (adjusted for computer software) 1,794 1,740 3,441
Non underlying operating costs 2,890 3,133 6,625
Tax in respect of the above (691) (518) (1,129)
Underlying profit after tax 8,572 7,051 17,291
Underlying earnings per share Pence Pence Pence
Basic underlying earnings per share 9.99 8.26 20.20
Diluted underlying earnings per share 9.75 8.24 20.00
10. Acquisitions
St James Square Law Firm Limited ('SJS')
On 1 May 2023 the Group exchanged contracts to acquire SJS by purchasing the
controlling membership interests of the entity. This acquisition completed on
16 June 2023. SJS is a law firm which will strengthen Knights' presence in the
North East of England and provides entry into a new location with an office in
Newcastle.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. These figures are
provisional as the purchase accounting is not yet finalised:
Carrying amount £'000 Fair value adjustment £'000 Total £'000
Identifiable assets
Identifiable intangible assets - 20 20
Property, plant and equipment 30 (7) 23
Contract assets 250 - 250
Trade and other receivables 364 - 364
Cash and cash equivalents 272 - 272
Liabilities
Trade and other payables (406) - (406)
Borrowings to be repaid within the year (532) - (532)
Borrowings to be repaid over 1 year (638) - (638)
Provisions (18) - (18)
Deferred tax (10) (5) (15)
Total identifiable assets and liabilities (688) 8 (680)
Goodwill 870
Total consideration 190
Satisfied by:
Cash 67
Deferred consideration 123
Total consideration transferred 190
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) (205)
Repayment of debt within the year 532
Net cash outflow arising on acquisition 327
Repayment of debt in future years 638
Intangibles relating to customer relationships of £20,000 has been arrived at
using the excess earnings method. The goodwill of £870,000 represents the
assembled workforce, with the acquisition bringing a number of new fee earners
and expected synergies. None of the goodwill is expected to be deductible for
income tax purposes.
A contingent consideration arrangement was entered into as part of the
acquisition. This is contingent on the sellers remaining in employment by the
Group so it has been excluded from the consideration and will be recognised in
the Consolidated Statement of Comprehensive Income on a straight-line basis
as a remuneration expense over the 2 years post acquisition period. This is
recognised within non-underlying operating costs.
The maximum undiscounted amount of all potential future payments under the
contingent consideration arrangement is £380,000 and is payable in equal
instalments on the first and second anniversary of completion.
There are also undiscounted deferred consideration payments totalling
£132,000 outstanding. This is payable in instalments on the first, second
and third anniversaries of completion.
SJS contributed £700,000 of revenue to the Group's Statement of Comprehensive
Income for the period from 1 May 2023 to 31 October 2023. The profit
contributed is not separately identifiable due to the hive-up of its trade and
assets being incorporated into Knights Professional Services Limited from 16
June 2023.
Baines Wilson Limited Liability Partnership ('BW')
On 1 May 2023 the Group exchanged contracts to acquire BW by purchasing the
controlling membership interests of the entity. This acquisition completed on
2 June 2023. BW is a law firm which will strengthen Knights' presence in the
North of England and provides entry into a new location with an office in
Carlisle.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. These figures are
provisional as the purchase accounting is not yet finalised.
Carrying amount £'000 Fair value adjustment £'000 Total £'000
Identifiable assets
Identifiable intangible assets - 383 383
Property, plant and equipment 409 27 436
Contract assets 94 - 94
Trade and other receivables 685 - 685
Cash and cash equivalents 302 - 302
Liabilities
Trade and other payables (295) - (295)
Borrowings (130) - (130)
Provisions (30) - (30)
Deferred tax (16) (96) (112)
Total identifiable assets and liabilities 1,019 314 1,333
Goodwill 1,062
Total consideration 2,395
Satisfied by:
Cash 2,395
Total consideration transferred 2,395
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) 2,093
Repayment of debt 130
Net cash outflow arising on acquisition 2,223
Intangibles relating to customer relationships of £383,000 has been arrived
at using the excess earnings method. The goodwill of £1,062,000 represents
the assembled workforce, with the acquisition bringing a number of new fee
earners and expected synergies. None of the goodwill is expected to be
deductible for income tax purposes.
A contingent consideration arrangement was entered into as part of the
acquisition. This is contingent on the sellers remaining in employment by the
Group so it has been excluded from the consideration and will be recognised in
the Statement of Comprehensive Income on a straight-line basis as a
remuneration expense over the 3 years post-acquisition period. This is
recognised within non-underlying operating costs.
The maximum undiscounted amount of all potential future payments under the
contingent consideration arrangement is £1,020,000 and is payable in equal
instalments on the first, second and third anniversary of completion.
BW contributed £1,432,000 of revenue to the Group's Statement of
Comprehensive Income for the period from 1 May 2023 to 31 October 2023. The
profit contributed is not separately identifiable due to the hive-up of its
trade and assets being incorporated into Knights Professional Services Limited
from 2 June 2023.
11. Reconciliation of profit to net cash generated from operations
6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Profit before taxation 6,892 4,116 11,529
Adjustments for:
Amortisation 1,845 1,793 3,544
Depreciation - property, plant and equipment 1,463 1,143 2,364
Depreciation - right-of-use assets 2,854 2,808 5,706
Loss on disposal of equipment - 2 2
Contingent consideration expense 1,548 2,230 4,436
Non-underlying operating costs 1,263 864 2,338
Non-underlying finance costs 72 - 152
Non-underlying gain on disposal - - (318)
Non-underlying share based payments 7 11 17
Effective interest on deferred consideration - 28 -
Share based payments 852 417 1,248
Interest income (32) (18) (52)
Interest expense 2,280 1,624 3,661
Operating cash flows before movements in working capital 19,044 15,018 34,627
Decrease/(increase) in contract assets 1,420 (4,741) (3,924)
(Increase)/decrease in trade and other receivables (5,028) 3,679 3,346
Increase/(decrease) in provisions 170 (552) (738)
(Decrease)/increase in contract liabilities (11) (3) (19)
Decrease in trade and other payables (2,625) (5,311) (3,861)
Cash generated from operations 12,970 8,090 29,431
12. Alternative performance measures
Underlying PBT (Profit Before Tax) is calculated as follows:
6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Profit before tax 6,892 4,116 11,529
Amortisation (adjusted for computer software) 1,794 1,740 3,441
Non-underlying costs (note 6) 2,818 3,451 6,791
Non-underlying gains on disposal (note 6) - (318) (318)
Non-underlying finance costs (note 6) 72 - 152
Underlying profit before tax 11,576 8,989 21,595
Underlying EBITDA is calculated as follows:
6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Operating profit 9,212 5,722 15,290
Depreciation and amortisation charges (note 4) 6,162 5,746 11,616
Non-underlying operating costs (note 6) 2,818 3,451 6,791
Non-underlying gains on disposal (note 6) - (318) (318)
Underlying EBITDA 18,192 14,601 33,379
Net debt is calculated as follows:
6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Borrowings 44,620 39,931 33,265
Cash and cash equivalents (6,333) (4,374) (4,045)
Net debt 38,287 35,557 29,220
13. Free cash flow and cash conversion %
Free cash flow measures the Group's underlying cash generation. Cash
conversion % measures the Group's conversion of its underlying PAT (Profit
After Tax) into free cash flows. Free cash flow is calculated as the total of
net cash from operating activities after adjusting for tax paid and the impact
of IFRS 16. Cash conversion % is calculated by dividing free cash flow by
underlying PAT, which is reconciled to profit after tax (note 9).
6 months ended 31 October 2023 6 months ended 31 October 2022 Year ended
(Unaudited) (Unaudited) 30 April 2023 (Audited)
£'000 £'000 £'000
Cash generated from operations (note 11) 12,970 8,090 29,431
Tax paid (3,754) (415) (2,424)
Total cash outflow for IFRS 16 leases (3,303) (3,626) (6,728)
Free cash flow 5,913 4,049 20,279
Underlying profit after tax (note 9) 8,572 7,051 17,291
Cash conversion (%) 69% 57% 117%
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