Knights Group ends first half in line with expectations

The AIM-traded firm expected to report half-year revenue of £75.3m, reflecting a 6% increase year-on-year.

Its underlying profit before tax was anticipated to be £11.5m, showing substantial growth of 28% compared to the prior year, with the underlying profit before tax margin rising from 12.6% to 15.3%.

Despite facing challenges in the housing, merger, and acquisition markets, the company said it achieved low single-digit organic growth during the first half, contributing to its overall performance.

Knights Group said it also demonstrated strong financial discipline by maintaining debtor days at 31 as of 31 October, consistent with the same period in the previous year, and a total lock-up improvement from 103 days in October 2022 to 93 days in October 2023.

That focus on cash management resulted in a net debt of £38.3m at the end of October, providing substantial headroom relative to its recently increased £70m revolving credit facility.

That included acquisition consideration, debt, and related costs of around £7.5m in the first half.

Regarding human resources, Knights said it expanded its team by recruiting 20 senior hires during the first half of the year, compared to just nine in the same period last year.

The employee churn rate for the period was 6% - a notable improvement from 11% during the same period last year.

Furthermore, Knights Group noted the successful integration of its prior-year acquisitions, Coffin Mew in Portsmouth and Meade King in Bristol.

In addition, it completed the acquisition of St James Law in Newcastle and Baines Wilson in Carlisle during the first half.

“We continue to execute our strategy successfully, delivering profitable, cash generative growth, while focusing on delivering a premium service,” said chief executive officer David Beech.

“Entering the second half, we are encouraged by the group’s strong performance, as we continue to attract high quality, talented professionals, and monitor an attractive and growing pipeline of potential acquisitions for the group.”

Knights said it would provide a further update on trading with its half-year results announcement in mid-January.

At 1106 BST, shares in Knights Group Holdings were up 4.48% at 95.92p.

Reporting by Josh White for Sharecast.com.