REG - Knights Group Hldgs - Half Year Results
Today 07:00
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RNS Number : 4091O Knights Group Holdings PLC 12 January 2026
Knights Group Holdings plc
("Knights" or the "Group")
Half Year Results
Strong first half with a firm return to organic growth; confident in
delivering full year
Knights, the national legal and professional services business, today
announces its half year results for the six months ended 31 October 2025.
Financial highlights
· Underlying Revenue(1) increased by 30% to £103.2m (H1 FY25:
£79.4m), with a return to organic growth of c.3%
· Underlying PBT(2) up 12.5% to £16.4m (H1 FY25: £14.6m)
· Underlying PBT margin at 16% (H1 FY25: 18%), as expected
following anticipated higher payroll taxes (national insurance contributions),
the impact of interest rate movements and planned investment in technology and
AI
· Reported profit before tax of £2.4m (H1 FY25: £9.0m) due to an
increase primarily in acquisition related non-underlying costs
· Basic underlying EPS(3) increased by 11% to 14.09p per share (H1
FY25: 12.71p)
· Debtor days of 32 (H1 FY25: 33) and lock up(4) of 95 days (H1
FY25: 98), reflecting continued working capital discipline and success in
reducing typically higher lock up(4) in acquired businesses
· Cash conversion(5) was particularly strong at 122%
· Net debt(6) at £75.2m (H1 FY25: £50.1m, FY25: £64.8m) after
c.£15m cash paid in relation to acquisitions and capex of c.£3.7m
· Interim dividend of 1.94p per share (H1 FY25: 1.76p), an increase
of 10%
Strategic and operational highlights
Organic growth supported by strong recruitment and improvement in retention
· Continued success in attracting high-calibre talent, with 46
senior fee earners joining or scheduled to join shortly (H1 FY25: 43)
· Annualised churn(7) reduced to 9% (H1 FY25: annualised: 20%),
reflecting successful engagement and leadership initiatives
· Strong pricing discipline maintained, supported by a continued
focus on operational excellence
Strategically scaling our platform for organic growth
· Cemented leading position in the Midlands: prior year acquisition,
Thursfields, integrated and performing well
· Built scale in the attractive South East market: Birkett Long and Rix
& Kay extend presence following largest acquisition to date, IBB, in April
2025
· Established a presence in Cardiff organically, complemented by
acquisition: with initial high-quality recruits complemented by acquisition of
Le Gros
Enhanced infrastructure investment provides platform for future growth
· Strengthened operational management team: expanded Client
Services Directors and new Chief Technology Officer role
· Invested in our office network: Upgraded a number of offices,
with 32 higher spec offices today (compared to 6 at IPO) providing access to
wider pools of talent attracted by satellite locations
· Targeted investment in technology: Advancing technology and AI
initiatives to enhance productivity and client service and to drive further
differentiation from independent firms
Current trading and outlook
· H2 has started well, building on the momentum achieved in the
first half
· Well positioned to continue to drive organic growth momentum,
reflecting the full benefit of recent hires combined with strong retention of
existing talent
· H2 to benefit from full period contribution from recent
acquisitions
· Confident in delivering a full year performance in line with
market expectations
David Beech, CEO of Knights, commented:
"The first half has been a period of significant progress for Knights, as we
firmly returned the Group to organic growth, while continuing to scale the
platform we have developed over many years.
We are attracting top talent, with ambitious, high-calibre lawyers recognising
and choosing our corporate structure, collaborative culture and the
opportunity we provide to develop within a firm of both national scale and
local reach. We have also significantly expanded our presence in the South
East, and Wales, whilst effectively integrating prior period acquisitions
including our largest to date.
Looking further ahead, the combination of our strengthened platform and
operational management structure, ongoing disciplined financial management,
approach to harnessing technology, and the growing awareness of our national
brand, positions Knights well to continue driving sustainable, profitable
growth beyond the current financial year."
Footnotes
(1 )Underlying revenue excludes the Crime business which was
acquired with IBB Law (completed on 4 April 2025). This business was non-core,
as stated at the time of the acquisition, and we completed its sale on 18 July
2025. The business generated revenue of £0.2m and a loss before tax of
£0.4m in the period.
(2 )Underlying PBT excludes amortisation of acquired intangibles,
non-underlying operating expenses, revenue, non-underlying finance costs and a
gain on disposal of a customer list from an acquired business. Non-underlying
revenue and operating expenses include transaction and onerous lease expenses
in relation to acquisitions, contingent acquisition payments, disposal of
acquired assets, along with one-off restructuring and professional expenses,
mainly incurred on acquisitions, through streamlining support functions or
strategic reorganisations. Contingent acquisition payments are treated as a
non-underlying expense as this represents payments for acquisitions which are
dependent on the continued employment of certain individuals in the business
for an agreed contractual period after an acquisition of one to three years to
preserve the acquired goodwill and customer relationships. Accounting
standards require such arrangements to be treated as remuneration in the
Statement of Comprehensive Income. However, the individuals also receive
market rate salaries, therefore, if not separately identified, these payments
would significantly distort the reported results.
(3 )Underlying EPS is underlying PAT divided by the weighted
average number of ordinary shares in issue.
(4 )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.
(5 )Cash conversion is calculated as the total of cash from
operations, less tax paid and underlying IFRS 16 net lease payments, divided
by underlying profit after tax.
(6 )Net debt includes cash and cash equivalents, borrowings and
acquired debt but excludes lease liabilities.
(7 )Churn is calculated based on the number of qualified fee earners
who had been employed by the Group for more than one year. Churn is calculated
taking the number of leavers in the above group over the financial year as a
percentage of the average number of colleagues for the year. Churn excludes
expected churn from acquisitions in the year of acquisition and the first full
year post acquisition, redundancies and retirements. Retention is 100% less
the churn rate.
These footnotes apply throughout the RNS
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.
Enquiries
Knights
David Beech, CEO Via MHP
Kate Lewis, CFO
Deutsche Numis (Nomad and Broker)
Stuart Skinner, Kevin Cruickshank +44 20 7260 1000
MHP (Media enquiries)
Katie Hunt, Eleni Menikou, Lucy Gibbs +44 (0) 7884 494112
knights@mhpgroup.com
Notes to Editors
Knights is a fast-growing, 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 and Private
Wealth services. It is focussed on key UK markets outside London and currently
operates from 32 offices located in Ascot, Basildon, Beaconsfield, Birmingham,
Brighton, Bristol, Cardiff, Carlisle, Chelmsford, Cheltenham, Chester,
Colchester, Exeter, Kings Hill, Leeds, Leicester, Lincoln, Manchester,
Newcastle, Nottingham, Oxford, Portsmouth, Reading, Sheffield, Solihull,
Stoke, Teesside, Uxbridge, Weybridge, Wilmslow, Worcester and York.
Chief Executive's Review
The first half of the financial year has been one of significant progress for
Knights, having returned to organic revenue growth and successfully integrated
acquisitions, as we build on the platform we have developed over many years.
Our focus remains on sustainable, profitable growth, delivered through
disciplined operational and financial management, thoughtful investment, and a
commitment to strengthening the quality of our team and diversified service
offering.
A strong first half
We delivered a strong performance in the six months to 31 October 2025, with
revenue from underlying operations(1) rising 30% to £103.2m (H1 FY25:
£79.4m) including organic growth of c.3%. This achievement is particularly
pleasing given the broader market backdrop, demonstrating the strength of our
diversified service lines, our ability to attract and retain high calibre
talent, and the value we are creating through our acquisition strategy.
Underlying PBT(2) from continuing operations increased to £16.4m, a rise of
12.5% on the comparative period (H1 FY25: £14.6m). This represented an
underlying PBT margin of 16% (H1 FY25: 18%), which was in line with our
expectations as we absorbed higher payroll taxation and the impact of interest
rate movements and continued to invest in technology, including AI, where we
see opportunities to enhance service delivery, operational efficiency,
long-term scalability and strengthen our competitive advantage in the regions.
Reported profit before tax reduced to £2.4m in H1 FY26 (H1 FY25: £9.0m) as a
result of higher non- underlying costs relating to the acquisitions in the
period and prior years.
Returned to organic growth
Our ability to attract ambitious, high-calibre professionals is a key element
in driving our organic growth. During the first half, 46 senior fee earners
either joined the business or are scheduled to start shortly (H1 FY25: 43),
reinforcing our position as a compelling home for top talent who value our
corporate structure, culture of collaboration, and opportunity for development
in a firm of national scale with a growing network of offices.
The other key driver of organic growth is staff churn(7) which, at an
annualised 9% (H1 FY25 annualised: 20%), has remained low in line with the
step down achieved in the second half of FY25 (10%), reflecting the positive
impact of the engagement and leadership initiatives introduced across the
business over the past year.
These initiatives include increased mentoring from our Client Services
Directors, more face to face time in the offices, and regular forums for
colleagues to come together in our Stoke office. They are enabling a stronger
team culture and better understanding of the breadth of our services and our
business strategy which is supporting greater cross-collaboration, with an
increasing number of teams being formed across multiple offices to deliver the
best solutions to clients.
Our enhanced reputation, strong client base and breadth of services position
us well to be the leader in local markets, sustain our strong pricing
discipline, and be an employer of choice for ambitious professionals who are
attracted to the combination of working locally with being able to offer
diverse expertise from across our network to their clients. Having grown our
number of locations to 32, up from 6 at IPO in June 2018, we also now have
access to substantially wider pools of talent.
Strategically scaling our platform
In line with our strategy, the business has continued to successfully scale
up, in a disciplined way. This was achieved through acquisitions made in the
first half of this year, the effective integration of those made in the prior
year, and organic expansion, which substantially extended our presence across
the UK - in the West Midlands, the Thames Valley, the South East, and Cardiff.
Cemented our leading position in the Midlands
We cemented our leading position in the Midlands by welcoming substantial
teams across the West Midlands through the acquisition of Thursfields Legal
Limited which completed in September 2024. The acquisition brought a national
client base for its premium services, including a strong private wealth
offering, spanning private client, family and residential property, alongside
corporate, real estate and dispute resolution services. Having integrated
the business quickly, it is performing well generating revenues and
contributing to profit as expected.
Built scale in the attractive South East market with three acquisitions
We have made three acquisitions over the last year, accelerating our growth in
the South East region which is an attractive market due to its proximity to
areas of inward investment, major corporate clusters and affluent
communities. By significantly extending our presence in the region,
complementing our existing offices in Kings Hill, Weybridge and Portsmouth, we
have created greater opportunities in the region across a diverse suite of
premium legal services and are attracting high quality work and talent.
Our largest acquisition to date, IBB Law LLP, completed in April 2025 bringing
offices across the Thames Valley, while extending Knights' existing services
across corporate, real estate and private wealth.
In June 2025 we completed the acquisition of Birkett Long LLP and Birkett Long
IFA LLP with the acquisition of Rix & Kay LLP completing in August 2025.
Birkett Long expanded Knights' presence into Essex, extended our existing
private client, real estate and corporate service lines further and provided
an entry point into financial advisory, which Knights has long considered a
complementary service line and growth opportunity. Rix & Kay, a smaller
acquisition, strengthened our presence in Kent and Sussex, adding to our
existing teams in Brighton and Kings Hill with experts across corporate,
commercial property, disputes and private client.
Overall, we have significantly grown the number of fee earners in the key
South East region with all businesses migrated onto our central operational
infrastructure, performing well and working closely with our existing teams, a
testament to our proven approach to integrating acquisitions effectively.
Established a presence in Cardiff organically, complemented by acquisition
Having established a presence in Cardiff through a number of senior fee earner
appointments, we acquired Le Gros Solicitors Limited in August 2025, adding a
team of six commercial and residential property fee earners. The Cardiff
office is not only Knights' first outside England, but was also a
predominantly organic opening, built initially around a team of high-quality
recruits, aided by the city's proximity to our offices in Bristol and
Cheltenham.
As part of Knights, all these acquisitions benefit from our well-developed
infrastructure and access to its wider team of specialists across the country,
enabling a broader service offering to clients from day one.
Together, these additions have not only broadened our geographic footprint but
also strengthened our range of capabilities in key areas of demand. With all
acquired teams transitioning smoothly into the Group, and performing well,
they are now providing strong platforms for ongoing recruitment in new
locations, expanding the Group's opportunities for organic growth.
Acquisitions remain an important part of our growth strategy, and the first
half provided further evidence of the strength of our disciplined approach to
identifying and integrating businesses with a strong fit. We remain highly
selective in our approach and continue to see a solid pipeline of
opportunities that would complement our existing platform in the future.
A continued focus on financial discipline
We have maintained a strong focus on financial discipline. Debtor days
improved to 32 (H1 FY25: 33) and lock up(4) days were reduced to 95 (H1 FY25:
98) as at 31 October 2025, reflecting ongoing focus on working capital
management.
Net debt(6) is £75.2m, after c.£15m of acquisition-related cash expenditure
during the period and capex of around £3.7m. Cash performance remained
strong, and we were pleased to extend our existing £100m revolving credit
facility, for a further year to November 2028 on the same terms. This provides
long-term funding to support our growth strategy, including making selective,
value-accretive acquisitions.
Investing in technology for the future
As a legal and professional services business of scale, we are committed to
harnessing technology to enhance efficiency and client service.
During the first half, we appointed a Chief Technology Officer who has
significant experience in global operations. This is a new role within the
Group and will help to enhance our focus on exploring, piloting and developing
AI enabled tools and platforms. Our single core platform and one team culture
allows us to deploy these new technologies rapidly and consistently, whilst
being mindful of security issues.
In the first half we have enhanced our document management. We continue to
work on other clearly defined initiatives, in particular to improve
productivity and service, which will result in a more resilient, agile and
scalable business platform.
Well positioned to leverage our strengthened platform
Having worked on the business to put in place effective infrastructure to
support growth, including by expanding our operational management team - our
Client Services Directors alongside the creation of the new CTO role, and
invested in our office network, we feel well placed to support significant
growth from our existing platform in the coming periods.
Dividend
The Group's progressive dividend policy seeks to maintain a balance between
retaining profits to execute our strategy and delivering value for
shareholders as our strategy yields positive performances.
The Board is, therefore, proposing an interim dividend of 1.94p per share (H1
FY25: 1.76p), an increase of 10%. The dividend will be payable on 13 March
2026 to shareholders on the register at 13 February 2026.
Outlook
The second half has started well, building on the momentum achieved in the
first half. We are well positioned to continue to drive organic growth
momentum, reflecting the fuller benefit of recent hires combined with strong
retention of our existing talent. This, together with a full period
contribution from recent acquisitions underpins our confidence in delivering a
full year performance in line with market expectations.
The combination of our strengthened platform and operational management
structure, ongoing disciplined financial management and approach to harnessing
technology, and the growing awareness of our national brand positions Knights
well to continue driving sustainable, profitable growth beyond the current
financial year.
We remain committed to building a stronger, more efficient, scalable and more
resilient business that continues to create long-term value for our people,
our clients and our shareholders.
CFO Review
I am pleased to report another period of profitable, cash generative growth
with strong underlying revenue(1) growth of 30% to £103.2m compared to
£79.4m in the prior year and underlying EBITDA increased by 19% from the
prior year to £25.5m (H1 FY25: £21.4m).
Underlying profit before tax increased by 12.5% to £16.4m compared to £14.6m
in the prior year. Reported profit before tax (PBT) fell to £2.4m (H1 FY25:
£9.0m) due to increased non-underlying costs driven primarily by the
increased number of acquisitions completed in the six months, resulting in
higher one-off costs from the acquisitions and subsequent restructuring and
cost consolidation processes.
Our continued disciplined approach to financial management has generated
excellent cash conversion(5) of 122% for the half year enabling us to fund our
continuing growth strategy from our existing bank facilities.
Financial results
6 months ended 6 months ended % change
31 October 2025
31 October 2024
(Unaudited)
(Unaudited)
£'000
£'000
Revenue - underlying 103,220 79,414 30%
Other operating income 5,686 4,857 17%
Staff costs (62,644) (47,697) 31%
Impairment of trade receivables and contract assets (542) (622) (13%)
Other operating charges (20,219) (14,535) 39%
Underlying EBITDA 25,501 21,417 19%
Underlying EBITDA % 24.7% 27.0%
Depreciation charges under IFRS 16 (2,948) (2,499) 18%
Finance charges under IFRS 16 (1,496) (1,000) 50%
Underlying EBITDA post IFRS 16 charges 21,057 17,918 18%
Depreciation and amortisation charges (excluding amortisation on acquired (2,355) (1,571) 50%
intangibles)
Share of results of joint ventures 561 - -
Underlying finance costs (2,844) (1,856) 53%
Underlying finance income 30 126 (76%)
Underlying profit before tax 16,449 14,617 13%
Underlying profit before tax % 15.9% 18.4%
Underlying tax charge (4,410) (3,691) 19%
Underlying profit after tax 12,039 10,926 10%
Basic underlying EPS (pence) 14.09 12.71 11%
Revenue
Total underlying revenue(1) for the half year is £103.2m compared to £79.4m
for the same period last year, an increase of 30%. Of this increase, £21.8m
is increased income from FY25 and FY26 acquisitions, with the balance of £2m
being growth in organic income.
Organic revenues
We are pleased to report a return to organic growth of 2.6% in the period
reflecting the benefit of continuing strong levels of recruitment of senior
fee earners and a substantial reduction in fee earner churn(7) over the last
twelve months alongside pricing increases and higher revenues in
property-related areas which are positively impacted by decreasing mortgage
interest rates. Our leading indicators of future organic growth, being
recruitment of experienced fee earners with strong client following and
reduced levels of churn(7), are continuing to improve, supporting expectations
of further organic growth in the future.
Revenue from acquisitions
During FY25 we acquired Thursfields Legal Limited and IBB Law LLP. Both
acquisitions completed during FY25 and were fully integrated onto our systems
by the end of the financial year. Both acquisitions have performed well
during the first half of FY26, accounting for £12.7m of the increase in
revenues from H1 FY25.
In the six months to 31 October 2025 we acquired Birkett Long LLP, Birkett
Long IFA LLP, Rix and Kay Solicitors LLP and Le Gros Solicitors Limited. All
acquisitions are fully integrated onto our systems and are performing well,
contributing total revenue of £9.1m in the period.
Employee costs
Total staff costs as a percentage of revenue were 60.7% for the half year (H1
FY25: 60.1%) reflecting the impact of increased payroll taxes of c.£1m in the
period, offset by some leverage of support staff costs as the ratio of fee
earners to support staff has increased to 3.9:1 as at 31 October 25 compared
to 3.7:1 at 31 October 24.
Other operating income
Although the total value of other operating income has increased by £0.8m, as
a percentage of revenue it has decreased from 6.1% in H1 FY25 to 5.5% in H1
FY26 as a result of lower interest rates. The absolute increase in total other
operating income is primarily due to increased interest received on client
monies (net of monies paid out to clients) due to increased volumes of client
monies held (as a result of acquisitions made).
Other operating charges
Other operating charges have increased as a percentage of revenue to 19.6%
compared to 18.3% in the same period last year. Expenses increased to
support the increase in revenue and in the half year we have seen an increase
in costs of c.£0.6m relating to further investment in AI and technology.
Underlying EBITDA
During the period, underlying EBITDA increased by £4.1m to £25.5m (H1 FY25:
£21.4m). Underlying EBITDA margin has decreased to 24.7% (H1 FY25:
27.0%). The 2.3% reduction in EBITDA margin is explained as follows:
increased cost due to additional payroll taxes (higher national insurance
contributions) accounts for 1.0% (£1m); the reduction of client interest
income was 0.7% (£0.7m), and investment in enhanced AI and other technology
spend of 0.6% (£0.6m) in the period.
Underlying EBITDA excludes non-underlying income and operating costs.
Non-underlying operating costs include transaction and onerous lease expenses
mainly in relation to acquisitions, contingent consideration and one-off
restructuring and professional costs incurred mainly as a result of
streamlining the support services in relation to acquisitions. The Board
considers this to be a key metric to measure underlying business performance.
Contingent acquisition payments are treated as a non-underlying expense as
these represent payments for acquisitions which are dependent on the continued
employment of certain individuals in the business for an agreed period of one
to three years after an acquisition to preserve the acquired goodwill and
customer relationships. Accounting standards require these arrangements to be
treated as remuneration in the Statement of Comprehensive Income. However,
the individuals also receive market rate salaries and therefore, if not
separately identified, these payments would significantly distort the reported
results.
IFRS 16 depreciation and finance charges
The IFRS 16 depreciation and finance charges reflect the accounting charges in
respect of all leases with a term of over one year. The costs in the period
have reduced marginally to 4.3% of revenue (H1 FY25: 4.4%) as we continue to
manage our property portfolio to leverage our property costs.
Depreciation and amortisation charges
The charge for the half-year has increased to 2.3% of revenue (H1 FY25: 2.0%)
following recent investment in property refurbishments and IT infrastructure.
Share of results of joint ventures
The share of results of joint ventures of £0.6m in the period represents the
share of net assets receivable from the Group's joint venture with Convex
Corporate Finance Limited.
Finance charges
Finance charges, excluding lease interest, increased by £1m in the period to
£2.8m (H1 FY25: £1.8m) as a result of the higher net debt(6) balance due to
cash paid in respect of acquisitions in the current and prior years.
Underlying finance income
This income related primarily to income recognised from sub-leases of excess
space within our property portfolio.
Underlying Profit before Tax (PBT)
Underlying profit before tax does not include amortisation of acquired
intangible assets, transaction expenses and onerous leases (mostly related to
acquisitions), contingent payments for acquisitions, disposals of acquired
assets, or one-time restructuring and professional fees largely incurred
during the streamlining of support functions connected to acquisitions.
Underlying profit before tax also excludes profit on sale and related
transactions recognised in the period on the sale of non-core areas of
business acquired as part of recent acquisitions.
In July, we disposed of the legal aid crime business acquired as part of the
IBB acquisition. Our exit from this area of the business had been identified
as part of the acquisition process. The business was disclosed as held for
sale in the year end accounts. During H1 FY26, before it was sold, the
business generated income of £0.2m and a loss of £0.4m. This income and
related costs are classified as non-underlying in the accounts. A £0.02m
profit on disposal is also included within non-underlying transactions for the
period.
As part of refocussing the financial services business acquired with the
Birkett Long acquisition towards higher value work, we have sold a book of
clients to a third party enabling us to focus on providing a premium service
to higher net worth individuals. Final proceeds are dependent on future income
generated by the acquirer of the transferred clients. The accounts for the
half year to October 2025 include a gain on disposal of the customer list of
£1.1m within non-underlying transactions.
Underlying profit before tax (PBT) is calculated to give a clearer picture of
business performance and to make it easier to compare profitability from year
to year.
6 months ended 6 months ended
31 October 2025
31 October 2024
(Unaudited)
(Unaudited)
£'000
£'000
Profit before tax 2,403 8,974
Non-underlying revenue (247) -
Amortisation on acquired intangibles 2,693 1,869
Contingent acquisition payments treated as remuneration 4,871 1,447
Other non-underlying costs 6,729 2,327
Underlying profit before tax 16,449 14,617
The Group's underlying PBT(2) has increased by 12.5% to £16.4m (H1 FY25:
£14.6m).
The underling profit before tax margin has decreased to 15.9% compared to
18.4% in the prior period as a result of the reduction in underlying EBITDA
margin of 2.3% (explained above), together with the increase in depreciation
and finance costs of £2.8m (0.7% reduction), offset by the recognition of the
share of results of joint ventures of £0.6m in the period (0.5%
contribution).
Reported profit before tax
The reported profit before tax in the period has decreased to £2.4m (H1 FY25:
£9.0m) due to the increase in non-underlying costs, contingent consideration
and amortisation of acquired intangibles.
Taxation
The effective rate of tax on the underlying profit of the business was 27% (H1
FY25: 25%) reflecting the impact of higher disallowable depreciation in the
period.
The tax charge for the period was £2.7m (H1 FY25: £2.8m). The effective tax
rate increased to 111% (H1 FY25: 32%) predominantly due to higher contingent
consideration charges which are disallowable for tax purposes.
Earnings per Share (EPS)
The basic underlying EPS(3) has increased by 11% to 14.09p per share (H1 FY25:
12.71p). The underlying EPS(3) is reflective of the Group underlying
performance and provides a meaningful comparison to the prior year.
The basic EPS for the period decreased 104% to (0.30p) from 7.14p in the prior
year. Taking account of the dilutive impact of potential share options, the
basic diluted EPS also reduced to (0.30p) per share (H1 FY25: 6.87p). This
reflected the increased effective tax rate explained above.
The weighted average number of shares used to calculate the undiluted EPS for
the half year was 85,427,787 (H1 FY25: 85,934,299).
Dividend
In line with the group's progressive dividend policy, reflecting the improved
underlying performance of the Group, balanced with the Board's strategy to
continue to reinvest profits to fund future growth plans, the Board has
declared an interim dividend of 1.94p per share (H1 FY25: 1.76p per share).
This will be a cash only dividend, payable on 13 March 2026 to all
shareholders on the register on 13 February 2026.
Balance Sheet
31 October 2025 31 October 2024 30 April 2025 (Audited)
£'000
(Unaudited) (Unaudited)
£'000
£'000
Goodwill and Intangible assets 114,697 90,877 105,873
Right of use assets 45,034 37,287 46,635
Investments 644 50 111
Loan to joint venture - 2,500 2,000
Property, plant and equipment 25,431 19,895 23,685
Assets & Liabilities held for sale 1,178 171 394
Working capital 68,278 63,709 64,640
Other provisions and deferred tax (22,603) (15,476) (20,272)
Lease liabilities net of lease receivables (53,255) (42,103) (52,529)
179,404 156,910 170,537
Cash and cash equivalents 8,496 4,075 5,853
Borrowings (83,648) (54,139) (70,682)
Net debt (75,152) (50,064) (64,829)
Deferred consideration (2,444) (2,399) (1,175)
Net assets 101,808 104,447 104,533
The Group's net assets at 31 October 2025 are £101.8m compared to £104.5m as
at 30 April 2025.
The decrease of £2.7m was primarily due to the accrued dividends in the
period of £2.6m, together with the reported loss of £0.3m generated in the
half year.
Working capital
Working capital is calculated as follows:
31 October 2025 31 October 2024 30 April 2025 (Audited)
£'000
(Unaudited) (Unaudited)
£'000
£'000
Contract assets 56,965 48,857 50,998
Trade and other receivables 42,987 33,009 39,552
Corporation tax receivable 703 915 882
Total current assets 100,655 82,781 91,432
Trade and other payables (32,197) (18,901) (26,662)
Contractual liabilities (180) (171) (130)
Total current liabilities (32,377) (19,072) (26,792)
Net working capital 68,278 63,709 64,640
Net working capital has increased by £3.7m from £64.6m as at 30 April 2025
to £68.3m as at 31 October 2025. Of this increase £2.0m related to working
capital acquired as part of acquisitions during the period. The remaining
increase relates mainly to an increase in contract assets (work in progress),
net of acquisitions, during the year of £3.7m. Although an increase from
the position as at 30 April 2025, this increase at half year is as expected
following the normal work in progress cycle with work in progress days at 31
October 2025 having reduced by 2 days from the same time last year. The
increase in contract assets is offset by an increase in trade payables of
£2.1m due to the timing of creditor payments.
The management of working capital continues to be a key focus for the Group
with strong systems and controls in place to manage the levels of trade
receivables and work in progress. The time taken to convert a unit of time
incurred into cash is reported as the lock up(4) days for the Group and is an
important KPI monitored by the Board, Client Services Directors and the wider
management team. As at 31 October 2025 lock up(4) was 95 days (31 October
2024: 98 days), made up of debtor days of 32 (31 October 2024: 33) and work in
progress days of 63 (31 October 2024: 65) demonstrating continued excellence
in financial management.
Due to the disproportionate amount of time that it takes to conclude certain
types of work such as CL medilaw, real estate investment and insolvency
matters these work types are excluded from our work in progress days
calculation as an exception, so as not to distract the majority of the Group
from focussing on achieving its excellent lock up(4) days. If work in
progress days were calculated including all valued work in progress of the
Group this would give work in progress days of 98 (31 October 2024: 111) and
hence total lock up, with no exclusions, of 130 days as at 31 October 2025 (31
October 2024: 144 days).
Cash flow
6 months ended 6 months ended
31 October 2025 31 October 2024 (Unaudited)
£'000
(Unaudited)
£'000
Underlying EBITDA 25,501 21,417
Change in working capital (5,360) (8,388)
Cash outflow for IFRS 16 leases (3,466) (2,957)
Movement in underlying share-based payment charge 735 445
Cash generated from underlying operations (pre-tax) 17,410 10,517
Tax paid (2,712) (3,617)
Net cash generated from underlying operating activities 14,698 6,900
Underlying profit after tax 12,039 10,926
Underlying cash conversion 122% 63%
Cash generation remains a key focus for the Board and management team. The
continued excellent financial management generated underlying operating
cashflows of £14.7m in the period being a conversion rate of 122% on
underlying profits. This excellent cash generation has resulted in net
debt(6) of £75.2m as at 31 October 2025 (30 April 2025: £64.8m) after a cash
outlay of £15m relating to acquisition consideration and £3.7m in respect of
capital expenditure in the period.
Net debt 6 months ended
31 October 2025
(Unaudited)
£'000
Net debt 30 April 2025 64,829
Other net cash (inflows) from operating activities (14,712)
Deferred and contingent acquisition payments 3,243
Consideration paid for acquisitions in the year (including acquired debt and 11,626
cash)
Unpaid acquired debt 117
Non-underlying costs paid & received 5,041
Purchase of own shares 598
Interest on borrowings 2,795
Joint venture loan capital and interest received (2,058)
Capital expenditure (net of landlord contributions) 3,673
Net debt 31 October 2025 75,152
At £75.2m this level of debt was in line with internal budgets as at 31
October 2025, with leverage for bank covenant purposes at 1.8 times EBITDA (as
defined for covenant purposes) which is within our banking covenants.
On 19 November 2025 we extended our existing revolving credit facility with
HSBC UK, AIB (GB) and NatWest for an additional year, providing a committed
facility of £100m until November 2028. Terms and interest margins remain
the same with applicable margins of between 1.65% and 2.55% over SONIA
dependant on leverage.
The extension of these facilities demonstrates the continued support of our
banking partners and ensures the Group has facilities available to enable us
to continue to execute our growth strategy into the medium term.
Knights Group Holdings plc
Consolidated Statement of Comprehensive Income
For the 6 month period ended 31 October 2025
Note 6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Revenue - underlying* 3 103,220 79,414 161,966
Non-underlying revenue 3 247 - -
Revenue 3 103,467 79,414 161,966
Other operating income 5,686 4,857 9,649
Staff costs* 4 (62,644) (47,697) (97,607)
Depreciation and amortisation charges* 5 (5,303) (4,070) (8,840)
Impairment of trade receivables and contract assets (542) (622) (1,241)
Other operating charges* 6 (20,219) (14,535) (29,839)
Operating profit before non-underlying costs and amortisation on acquired 20,445 17,347 34,088
intangibles
Amortisation on acquired intangibles 5 (2,693) (1,869) (4,033)
Non-underlying operating costs 7 (11,357) (3,711) (11,455)
Operating profit 6,395 11,767 18,600
Share of results of joint ventures 561 - 58
Finance costs* 8 (4,370) (2,898) (6,445)
Finance income 9 60 168 302
Non-underlying finance costs 7 (243) (63) (246)
Net finance costs (4,553) (2,793) (6,389)
Profit before tax 2,403 8,974 12,269
Taxation - underlying* (4,410) (3,691) (7,448)
Tax impact of non-underlying revenue (62) - -
Tax impact of non-underlying costs 1,810 852 2,755
Taxation (2,662) (2,839) (4,693)
(Loss)/profit and total comprehensive income for the period attributable to (259) 6,135 7,576
equity owners of the parent
Earnings per share Pence Pence Pence
Basic earnings per share 10 (0.30) 7.14 8.83
Diluted earnings per share 10 (0.30) 6.87 8.43
The above results were derived from the Group's continuing operations.
* Excluding non-underlying items and amortisation on acquired intangibles
As the Group has incurred a loss after tax for the period ending 31 October
2025, the options are non-dilutive so basic and diluted earnings per share are
the same.
Knights Group Holdings plc
Consolidated Statement of Financial Position
As at 31 October 2025
31 October 2025 31 October 2024 30 April 2025
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 82,082 66,038 72,893
Intangible assets 32,615 24,839 32,980
Investments 644 50 111
Property, plant and equipment 25,431 19,895 23,685
Right-of-use assets 45,034 37,287 46,635
Finance lease receivables 1,486 1,486 1,335
Trade and other receivables - 2,500 2,000
187,292 152,095 179,639
Current assets
Contract assets 56,965 48,857 50,998
Trade and other receivables 42,987 33,009 39,552
Finance lease receivables 463 366 405
Corporation tax asset 703 915 882
Cash and cash equivalents 8,496 4,075 5,853
Assets held for sale 1,178 171 1,283
110,792 87,393 98,973
Total assets 298,084 239,488 278,612
Equity and liabilities
Equity
Share capital 171 171 171
Share premium 75,262 75,262 75,277
Merger reserve (3,506) (3,506) (3,506)
Other reserve (792) - (576)
Retained earnings 30,673 32,520 33,167
Equity attributable to owners of the parent 101,808 104,447 104,533
Non-current liabilities
Lease liabilities 48,954 38,926 48,603
Borrowings 83,351 53,808 69,807
Deferred consideration 1,572 550 563
Deferred tax 11,822 8,923 11,217
Provisions 6,857 3,686 5,404
152,556 105,893 135,594
Current liabilities
Lease liabilities 6,250 5,029 5,666
Borrowings 297 331 875
Trade and other payables 32,197 18,901 26,662
Deferred consideration 872 1,849 612
Contract liabilities 180 171 130
Provisions 3,924 2,867 3,651
Liabilities held for sale - - 889
43,720 29,148 38,485
Total liabilities 196,276 135,041 174,079
Total equity and liabilities 298,084 239,488 278,612
Knights Group Holdings plc
Consolidated Statement of Changes in Equity
For the 6 month period ended 31 October 2025
Attributable to equity holders of the Parent
Share capital Share premium Merger reserve Other reserve £'000 Retained earnings £'000 Total
£'000
£'000
£'000
£'000
Balance at 1 May 2024 (audited) 171 75,262 (3,506) - 28,333 100,260
Profit for the period and total comprehensive income - - - - 6,135 6,135
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - - 448 448
Dividends - - - - (2,396) (2,396)
Balance at 31 October 2024 (unaudited) 171 75,262 (3,506) - 32,520 104,447
Profit for the period and total comprehensive income - - - - 1,441 1,441
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - - 713 713
Purchase of own shares - - - (598) - (598)
Issue of shares from EBT - 15 - 22 - 37
Dividends - - - - (1,507) (1,507)
Balance at 30 April 2025 (audited) 171 75,277 (3,506) (576) 33,167 104,533
Loss for the period and total comprehensive loss - - - - (259) (259)
Transactions with owners in their capacity as owners:
Credit to equity for equity-settled share-based payments - - - - 369 369
Transfer between reserves - (15) - 15 - -
Purchase of own shares - - - (598) - (598)
Issue of shares from EBT - - - 367 - 367
Dividends - - - - (2,604) (2,604)
Balance at 31 October 2025 (unaudited) 171 75,262 (3,506) (792) 30,673 101,808
Knights Group Holdings plc
Consolidated Statement of Cash Flows
For the 6 month period ended 31 October 2025
Note 6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Operating activities
Cash generated from operations 12 20,876 13,474 39,011
Non-underlying revenue received 3 247 - -
Non-underlying operating costs paid 7 (5,288) (2,468) (5,366)
Tax paid (2,712) (3,617) (5,820)
Contingent acquisition payments (2,595) (1,123) (2,571)
Net cash from operating activities 10,528 6,266 25,254
Investing activities
Acquisition of subsidiaries (net of cash acquired) 11 (10,199) (6,424) (24,972)
Other loan repayments 2,000 - 500
Loan interest received 58 - 234
Purchase of intangible fixed assets (87) (24) (83)
Purchase of property, plant and equipment (3,690) (6,117) (11,753)
Proceeds from lease receivables 243 230 458
Disposal of assets held for sale 25 37 141
Payment of deferred consideration (648) (1,365) (2,616)
Disposal of customer list 399 - -
Proceeds from sale of investment 70 - -
Net cash used in investing activities (11,829) (13,663) (38,091)
Financing activities
Proceeds of borrowings 25,000 21,500 52,150
Repayment of borrowings (11,400) (7,550) (22,550)
Proceeds from exercise of share options 1 - -
Repayment of debt acquired with current year subsidiaries (1,921) - (172)
Repayment of debt acquired with prior year subsidiaries (752) (428) (473)
Repayment of lease liabilities (2,248) (2,271) (4,661)
Landlord capital contribution 124 40 42
Associated lease costs (20) (78) (306)
Interest and other finance costs paid (4,321) (2,798) (6,213)
Purchase of own shares (598) - (598)
Dividends paid - (2,396) (3,903)
Net cash from financing activities 3,865 6,019 13,316
Net increase/(decrease) in cash and cash equivalents 2,564 (1,378) 479
Cash and cash equivalents at the beginning of the period 5,932 5,453 5,453
Cash - Continuing operations 8,496 4,075 5,853
Cash - assets held for sale - - 79
Total cash and cash equivalents at end of period 8,496 4,075 5,932
Knights Group Holdings plc
Notes to the Consolidated Interim Financial Statements
For the 6 month period ended 31 October 2025
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 2025 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 2026.
The Group's statutory financial statements for the year ended 30 April 2025,
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 9 January 2026.
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 banking facilities of £100,000,000, available until November 2028.
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 before non-underlying charges 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 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. Revenue
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Revenue - underlying 103,220 79,414 161,966
Non-underlying revenue 247 - -
Revenue 103,467 79,414 161,966
Non-underlying revenue relates to revenue generated from IBB Law LLP, a
subsidiary of Knights which operated a criminal law business. This subsidiary
was held as an asset for sale at 30 April 2025 and during the period has been
disposed of.
4. Staff costs
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Employee costs 63,640 47,694 98,679
Share-based payment charge 735 448 1,200
Aggregate remuneration of employees 64,375 48,142 99,879
Redundancy costs and share-based payment charges analysed as non-underlying (1,731) (445) (2,272)
costs
Underlying staff costs in Consolidated Statement of Comprehensive Income 62,644 47,697 97,607
5. Depreciation and amortisation charges
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Depreciation 2,310 1,457 3,333
Depreciation of right-of-use assets 2,948 2,499 5,223
Amortisation on computer software 45 54 92
Loss on disposal of property, plant and equipment - 60 192
Underlying depreciation and amortisation charges in Consolidated Statement of 5,303 4,070 8,840
Comprehensive Income
Amortisation on acquired intangibles 2,693 1,869 4,033
7,996 5,939 12,873
Amortisation on acquired intangibles has been separately identified within
overall depreciation and amortisation charges as it is deemed to be a
non-underlying cost, on the basis that it relates to acquisitions.
6. Other operating charges
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Establishment costs 5,448 4,065 8,301
Short term and low value lease costs 193 113 62
Other overhead expenses 14,578 10,357 21,476
20,219 14,535 29,839
7. Non-underlying costs
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Contingent acquisition payments treated as remuneration 4,871 1,447 3,752
Impairment of acquired right-of-use assets 1,989 - 2,078
Transaction costs 1,900 1,533 2,277
Redundancy and reorganisation staff costs 1,731 442 2,266
Loss on disposal of intangibles and property, plant and equipment 844 149 315
Costs relating to disposed subsidiary 653 - -
Recognition of onerous provisions on acquired contracts 311 - 750
Acquisition lease surrenders 132 - -
(Profit)/loss on disposal of right-of-use assets (4) 137 (340)
Other non-underlying operating costs (8) 3 5
Gain on disposal of customer list (1,062) - -
Impairment of acquired software - - 352
Non-underlying operating costs 11,357 3,711 11,455
Non-underlying finance costs 243 63 246
11,600 3,774 11,701
Non-underlying costs relate primarily to acquisition related costs or one off
transactions not relating to the core day to day trading of the Group. This
includes redundancy costs to streamline the support function of the Group
following acquisitions or strategic reorganisations, transaction costs
relating primarily to the costs of surrendering acquired contracts and onerous
costs in respect of acquisitions, this includes contracts acquired which
Knights cannot exit and properties which have become vacant as employees have
been moved into right-sized offices in the same region. Also 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. During
the period there was also a profit on the sale of a customer list from an
acquired business.
Non-underlying costs cash movement
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Non-underlying costs 11,600 3,774 11,701
Adjustments for:
Contingent acquisition payments shown separately (4,871) (1,447) (3,752)
Non-cash movements:
Impairment of acquired right-of-use assets (1,989) - (2,078)
(Loss) on disposal of intangibles and property, plant and equipment (844) (149) (315)
Recognition of onerous provisions on acquired contracts (311) - (750)
Non-underlying finance costs (243) (63) (246)
Profit/(loss) on disposal of right-of-use assets 4 (10) 468
Other non-underlying operating costs 8 (3) (5)
Transaction costs 165 (63) (107)
Gain on disposal of customer list 1,062 - -
Impairment of acquired software - - (352)
Additional cash movements:
Rental payments on onerous leases 559 193 435
Service charge payments on onerous leases 130 56 128
Dilapidation payments 18 180 239
5,288 2,468 5,366
Contingent acquisition payments are 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 Consolidated 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.
8. Finance costs
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Interest on borrowings 2,844 1,856 4,133
Interest on leases 1,526 1,042 2,312
4,370 2,898 6,445
9. Finance income
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Loan interest receivable 30 126 239
Lease interest receivable 30 42 63
60 168 302
10. Earnings per share
Basic and diluted earnings per share have been calculated using (loss)/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 2025 31 October 2024 30 April 2025 (Audited)
(Unaudited) (Unaudited) Number
Number Number
Weighted average number of ordinary shares in issue 85,967,308 85,934,299 85,950,758
Weighted average shares held in EBT (539,521) - (137,332)
Weighted average number of ordinary shares for the purposes of basic earnings 85,427,787 85,934,299 85,813,426
per share
Effect of dilutive potential ordinary shares:
Share options 5,710,009 3,300,000 4,027,011
Weighted average number of ordinary shares for the purposes of diluted 91,137,796 89,234,299 89,840,437
earnings per share
£'000 £'000 £'000
(Loss)/profit after tax (259) 6,135 7,576
Earnings per share Pence Pence Pence
Basic earnings per share (0.30) 7.14 8.83
Diluted earnings per share (0.30) 6.87 8.43
As the Group has incurred a loss after tax for the period ending 31 October
2025, the options are non-dilutive so basic and diluted earnings per share are
the same.
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
costs and revenue.
6 months ended 6 months ended Year ended
31 October 2025 31 October 2024 30 April 2025
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
(Loss)/profit after tax (259) 6,135 7,576
Non-underlying revenue (note 3) (247) - -
Amortisation on acquired intangibles (note 5) 2,693 1,869 4,033
Non-underlying costs (note 7) 11,600 3,774 11,701
Tax impact of non-underlying revenue 62 - -
Tax impact of non-underlying costs (1,810) (852) (2,755)
Underlying profit after tax 12,039 10,926 20,555
Underlying earnings per share Pence Pence Pence
Basic underlying earnings per share 14.09 12.71 23.95
Diluted underlying earnings per share 13.21 12.24 22.88
11. Acquisitions
Acquisitions summary
During the year the Group has completed four acquisitions Birkett Long LLP,
Birkett Long IFA, Rix & Kay Solicitors LLP and Le Gros Solicitors Limited.
The table below summarises the consideration paid and the net cash flow
arising on all acquisitions in the period:
Total
£'000
Total identifiable assets less liabilities acquired 3,210
Goodwill 9,283
Gain on bargain purchase (8)
Total consideration 12,485
Satisfied by:
Cash 10,624
Deferred consideration arrangement 1,861
Total consideration transferred 12,485
Net cash outflows arising on acquisition:
Cash consideration net of cash acquired 10,199
Net investing cash outflow arising on acquisition 10,199
Repayment of debt acquired* 1,906
Net financing cash outflow arising on acquisition 1,906
Repayment of debt in future periods 31
Details for the individual acquisitions are included on the following pages.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the tables below. The figures are
provisional as the purchase accounting is not yet finalised.
The acquisition date in each case is the date of exchange of the sale and
purchase agreement, being the date on which control passes and the Group is
exposed to variable returns.
*The difference of £15k on repayment of debt acquired compared to the
cashflow is due to payments made for acquired debt identified in the current
period but relating to a prior year acquisition.
Birkett Long LLP "Birkett Long"
On 6 May 2025 the Group exchanged contracts to acquire Birkett Long by
purchasing the controlling membership interests of the entity. This
acquisition completed on 13 June 2025. Birkett Long is a law firm which will
significantly strengthen Knights' presence in the South
East.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. The 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 934 1,254 2,188
Property, plant and equipment 892 (322) 570
Investments 200 - 200
Right-of-use assets - 3,369 3,369
Contract assets 1,501 - 1,501
Trade and other receivables 1,834 - 1,834
Cash and cash equivalents 14 - 14
Liabilities
Trade and other payables (2,240) 138 (2,102)
Lease liabilities - (3,369) (3,369)
Borrowings (656) - (656)
Provisions (892) - (892)
Deferred tax - (514) (514)
Total identifiable assets and liabilities 1,587 556 2,143
Goodwill 7,916
Total consideration 10,059
Satisfied by:
Cash 8,370
Deferred consideration 1,689
Total consideration transferred 10,059
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) 8,356
Repayment of debt 625
Net cash outflow arising on acquisition 8,981
Intangibles relating to customer relationships of £1,254,000 has been arrived
at using the excess earnings method. The goodwill of £7,916,000 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 £4,391,000 and is payable in equal
instalments on the first, second and third anniversary of
completion.
There are also undiscounted deferred consideration payments totalling
£1,849,000 outstanding. This is payable in instalments on the first, second
and third anniversaries of
completion.
Birkett Long contributed £7,431,000 of revenue to the Group's Statement of
Comprehensive Income for the period from 6 May 2025 to 31 October 2025. 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 13 June 2025.
Birkett Long IFA LLP "BL
IFA"
On 6 May 2025 the Group exchanged contracts to acquire Birkett Long IFA by
purchasing the controlling membership interests of the entity. This
acquisition completed on 13 June 2025. Birkett Long IFA is an independent
financial advisor which will further broaden Knights' offering as professional
services providers.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. The 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 - 1,067 1,067
Trade and other receivables 6 - 6
Cash and cash equivalents 222 - 222
Liabilities
Trade and other payables (14) - (14)
Deferred tax - (267) (267)
Total identifiable assets and liabilities 214 800 1,014
Negative goodwill arising on acquisition (8)
Total consideration 1,006
Satisfied by:
Cash 898
Deferred consideration 108
Total consideration transferred 1,006
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) 676
Net cash outflow arising on acquisition 676
Intangibles relating to customer relationships of £1,067,000 has been arrived
at using the excess earnings method. The gain on bargain purchase of £8,000
has been recognised immediately in the Group's Statement of Comprehensive
Income and included within non-underlying operating costs.
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 £282,000 and is payable in equal
instalments on the first, second and third anniversary of
completion.
There are also undiscounted deferred consideration payments totalling
£118,000 outstanding. This is payable in instalments on the first, second
and third anniversaries of
completion.
Birkett Long IFA contributed £541,000 of revenue to the Group's Statement of
Comprehensive Income for the period from 6 May 2025 to 31 October 2025. 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 13 June 2025.
In September 2025, 20% of the overall customer base has been sold to a third
party for an estimated cash consideration of £1,427,000, including initial
proceeds of £399,000. The remainder will be paid in yearly instalments with
final payment expected in September 2027. The total sales proceeds are subject
to customer retention rates. On sale, customer relationships of £216,000 have
been disposed of, this has resulted in a profit on sale of £1,062,000. The
profit has been recognised within non-underlying operating costs.
Rix & Kay Solicitors LLP "Rix & Kay"
On 27 June 2025 the Group exchanged contracts to acquire Rix and Kay by
purchasing the controlling membership interests of the entity. This
acquisition completed on 1 August 2025. Rix and Kay is a law firm which will
bolster Knights presence in the south-east.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. The 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 - 254 254
Property, plant and equipment 532 (84) 448
Right-of-use assets - 619 619
Contract assets 703 - 703
Trade and other receivables 926 - 926
Liabilities
Trade and other payables (1,598) 619 (979)
Lease liabilities - (619) (619)
Borrowings (605) (676) (1,281)
Provisions (511) - (511)
Deferred tax - (64) (64)
Total identifiable assets and liabilities (553) 49 (504)
Goodwill 1,103
Total consideration 599
Satisfied by:
Cash 599
Total consideration transferred 599
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) 599
Repayment of debt 1,281
Net cash outflow arising on acquisition 1,880
Intangibles relating to customer relationships of £254,000 has been arrived
at using the excess earnings method. The goodwill of £1,103,000 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 £270,000 and is payable in equal
instalments on the first, second and third anniversary of
completion.
Rix and Kay contributed £966,000 of revenue to the Group's Statement of
Comprehensive Income for the period from 27 June 2025 to 31 October 2025. 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 1 August
2025.
Le Gros Solicitors Limited "Le
Gros"
On 15 August 2025 the Group completed the acquisition of Le Gros by purchasing
the controlling membership interests of the entity. This acquisition completed
on the same date. Le Gros is a law firm which provides and entry into the
Welsh capital.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below. The figures are
provisional as the purchase accounting is not yet
finalised.
Carrying amount £'000 Fair value adjustment £'000 Total
£'000
Identifiable assets
Property, plant and equipment 4 (2) 2
Contract assets 51 - 51
Trade and other receivables 410 - 410
Cash and cash equivalents 190 - 190
Liabilities
Trade and other payables (96) - (96)
Total identifiable assets and liabilities 559 (2) 557
Goodwill 264
Total consideration 821
Satisfied by:
Cash 757
Deferred consideration 64
Total consideration transferred 821
Net cash outflow arising on acquisition:
Cash consideration (net of cash acquired) 568
Net cash outflow arising on acquisition 568
The goodwill of £264,000 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. No
intangibles have been recognised in relation to customer
relationships.
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 £175,000 and is payable in equal
instalments on the first, second and third anniversary of
completion.
There are also undiscounted deferred consideration payments totalling £71,000
outstanding. This is payable in instalments on the first, second and third
anniversaries of
completion.
Le Gros contributed £155,000 of revenue to the Group's Statement of
Comprehensive Income for the period from 15 August 2025 to 31 October 2025.
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 15 August 2025.
12. Reconciliation of profit to net cash generated from operations
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Profit before taxation 2,403 8,974 12,269
Adjustments for:
Non-underlying revenue (247) - -
Amortisation on computer software 45 54 92
Amortisation on acquired intangibles 2,693 1,869 4,033
Depreciation - property, plant and equipment 2,310 1,457 3,333
Depreciation - right-of-use assets 2,948 2,499 5,223
Loss on disposal of property, plant and equipment - 60 192
Contingent acquisition payments 4,871 1,447 3,752
Other non-underlying operating costs 6,486 2,264 7,703
Non-underlying finance costs 243 63 246
Share-based payment charge 735 445 1,194
Non-operating income - - (48)
Share of results of joint ventures (561) - -
Finance income (60) (168) (302)
Finance costs 4,370 2,898 6,445
Operating cash flows before movements in working capital 26,236 21,862 44,132
(Increase) in contract assets (3,353) (6,719) (4,850)
Decrease/(increase) in trade and other receivables 1,128 648 (1,903)
(Decrease)/increase in provisions (83) 325 71
Increase/(decrease) in contract liabilities 53 (17) (58)
(Decrease)/increase in trade and other payables (3,105) (2,625) 1,619
Cash generated from operations 20,876 13,474 39,011
13. Alternative performance measures
Underlying EBITDA is calculated as follows:
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Operating profit 6,395 11,767 18,600
Non-underlying revenue (note 3) (247) - -
Depreciation and amortisation charges (note 5) 7,996 5,939 12,873
Non-underlying operating costs (note 7) 11,357 3,711 11,455
Underlying EBITDA 25,501 21,417 42,928
Depreciation of right-of-use assets (note 5) (2,948) (2,499) (5,223)
Interest on leases (note 8) (1,526) (1,042) (2,312)
Lease interest receivable (note 9) 30 42 63
Underlying EBITDA post IFRS 16 21,057 17,918 35,456
Underlying PBT (Profit Before Tax) is calculated as follows:
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Profit before tax 2,403 8,974 12,269
Non-underlying revenue (note 3) (247) - -
Amortisation on acquired intangibles (note 5) 2,693 1,869 4,033
Non-underlying operating costs (note 7) 11,357 3,711 11,455
Non-underlying finance costs (note 7) 243 63 246
Underlying profit before tax 16,449 14,617 28,003
Underlying operating profit to underlying profit after tax (PAT) is calculated
as follows:
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Operating profit before non-underlying costs 20,445 17,347 34,088
Non-underlying revenue (note 3) (247) - -
Share of results of joint ventures 561 - 58
Finance costs (note 8) (4,370) (2,898) (6,445)
Finance income (note 9) 60 168 302
Underlying profit before tax 16,449 14,617 28,003
Taxation - underlying (4,410) (3,691) (7,448)
Underlying profit after tax 12,039 10,926 20,555
Net debt is calculated as follows:
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Borrowings 83,648 54,139 70,682
Cash and cash equivalents (8,496) (4,075) (5,853)
Net debt 75,152 50,064 64,829
14. 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 10).
6 months ended 31 October 2025 6 months ended 31 October 2024 Year ended
(Unaudited) (Unaudited) 30 April 2025 (Audited)
£'000 £'000 £'000
Cash generated from operations (note 12) 20,876 13,474 39,011
Tax paid (2,712) (3,617) (5,820)
Net underlying cash outflow for IFRS 16 leases (3,466) (2,957) (6,515)
Free cash flow 14,698 6,900 26,676
Underlying profit after tax (note 10) 12,039 10,926 20,555
Cash conversion (%) 122% 63% 130%
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