Knights ups revenue 13% to £142m as acquisitions continue
Listed firm hails “resilient performance against a challenging backdrop” as underlying profit before tax rises nearly a fifth to £21.6m
AIM-listed UK legal and professional services firm Knights saw revenue grow 13.1% in the year to 30 April 2023 as it continued a spate of acquisitions.
Revenue hit £142.1m, up from £125.6m in FY22. The firm also reported underlying profit before tax (PBT) of £21.6m – 19.1% higher than in the prior year. Its underlying PBT margin increased from 14.4% in FY22 to 15.2% and reported PBT jumped from £1.1m to £11.5m.
Knights CEO David Beech said: “This has been an important year for Knights, during which we placed a particular focus on strengthening our management team and developing our operating model to support the execution of our strategy and accelerate growth.
“Given the sharp rises in interest rates as we started the current financial year, we are seeing a softening of work in some transactional and debt-reliant activity such as residential property, M&A and our volume re-mortgage business, Integrar. However, this is being mitigated by a combination of growth in other areas which are less cyclical, such as private wealth and CL Medilaw (our specialist clinical negligence team), new client wins and our pricing strategy.”
Net debt edged higher to £29.2m from £28.9m, which Knights said was in line with its board’s expectations. That comes after the firm acquired two law firms in the South of England – Coffin Mew and Meade King, in the process adding around 100 fee earners.
Knights has also integrated a trio of Northern firms it bought in 2021 and early 2022 – Keebles, Archers Law and Langleys, which it said are performing well.
The firm said it had a solid start to the current financial year as it navigated “continuing macroeconomic uncertainty and rising interest rates”, with wins for clients including EuroFinance, World Rugby, Marie Curie and TTI. The firm has hired eight partners so far in FY24, compared to 13 over the course of FY23, and said that it was confident of a return to organic growth in the current financial year off the back of its new pricing strategy, having increased rates from 1 May 2023.
Since the start of FY24, the firm has also bolstered its presence in Northern England with the acquisition of St James’ Law and Baines Wilson, which saw the firm add almost 50 fee earners across Newcastle, Carlisle and Lancaster.
Beech commented: “We will continue carefully to consider acquisition opportunities which will consolidate or expand our existing footprint and provide a strong platform for future organic growth.
“Our outlook for the current financial year is therefore unchanged, with recent recruitment expected to drive a second half weighting, and we remain confident in our strategy and our ability to deliver profitable, cash-generative growth. We will continue to leverage our position as one of the largest commercial law firms located outside London, to grow our client and fee earner base organically and to drive operational improvements, complemented by acquisitive growth.”