Knights Group pleased with solid first half

(Sharecast News) - Knights Group reported a robust half-year performance in an update on Wednesday, with underlying profit before tax rising 25.9% to £14.6m, compared to £11.6m in the same period last year. The AIM-traded firm said revenue increased 5.4% to £79.4m, driven by improved operational efficiency and strategic acquisitions.

Its profit before tax margin expanded to 18.4%, up from 15.4% in the first half of 2024 and 12.6% in the first six months of 2023.

The period saw the acquisition of Thursfields Legal, enhancing Knights' presence in the West Midlands.

It said the acquired business was performing in line with expectations, adding that its integration was progressing smoothly.

Recruitment momentum continued, with 23 senior professionals joining Knights during the first half, up from 20 in the prior period, supported by increased brand recognition and a growing reputation in the UK legal market.

Knights said it maintained a strong focus on working capital management, with debtor days at 33 as of 31 October, compared to 31 days a year earlier.

Net debt widened to £50.1m from £35.2m at the end of April, reflecting acquisition-related payments of £8.9m.

The group also extended its revolving credit facility with HSBC UK, AIB GB and NatWest to £100m, up from £70m, with a new maturity date of November 2027, providing Knights with additional financial flexibility to pursue value-accretive acquisitions.

It also said that the recent changes to National Insurance contributions, announced in the Autumn Budget, were expected to have an annualised cost impact of £2m in the 2026 financial year, with minimal impact in 2025.

Knights said it planned to mitigate the costs through ongoing growth, efficiency initiatives, and pricing adjustments.

With a strong first-half performance and strategic initiatives well underway, Knights said it remained confident in delivering full-year results in line with market expectations.

"It has been a strong first half and I am particularly pleased with our focus on profitable revenue growth," said chief executive officer David Beech.

"The continued improvement in margin reflects the increasing quality of our revenue, team and our continued focus on the cost base."

Beech said the company was "encouraged" by its momentum in recruitment, which continued to build as Knights' national scale and reputation were recognised.

"These factors, together with our ongoing focus on operational excellence, and early signs of a recovery in corporate and residential housing work, position us well for a strong performance in the second half in line with market expectations."

Knights Group said it would provide a further update on trading with its half-year results on 14 January.

At 0933 GMT, shares in Knights Group Holdings were up 3.72% at 111.5p.

Reporting by Josh White for Sharecast.com.