Annual profits jump at Knights Group

Updating on full-year trading, the legal and professional services firm said revenues in the year to 30 April were 13% higher at £142m, while underlying pre-tax profits were ahead 19% at £21.5m.

The lock up - the combined debtor and work in progress days - was largely flat at 87, while net debt as at 30 April was £29m.

David Beech, chief executive, said: "Knights has made good progress during the year, delivering on our strategy of selectively making acquisitions, attracting high-quality talent [and] driving operational improvements across the business.

"We enter the new financial year well-placed to deliver organic growth from our increased network of integrated regional offices, with positive momentum from new client wins and a strong pipeline of partner hires."

During the year it acquired two law firms, Coffin Mew and Meade King, and earlier this month it agreed to buy Newcastle’s St James Law and Carlisle’s Baines Wilson.

As at 1000 BST, shares in the AIM-listed business were up 8% at 91.8p.

Andrew Shepherd-Barron, analyst at Peel Hunt, said: "There was no data given on staff churn, which was such an issue earlier in the year and the main concerns for investors.

"But the recovery in EBITDA margin - probably up from 16.4% to 17.5% - is encouraging. We place a big emphasis on margins, because they signal the quality of the business as well as its ability to generate cash after lock-up."

Peel Hunt has a ‘buy’ rating on the stock.

Knights is due to publish full-year results in mid-July.