Beech: Strong, cash generative, profitable growth
Shares in Knights rose yesterday on the back of a strong trading update, with their price now doubled since the national law firm floated last June.
On the back of four acquisitions, revenue for the year to 30 April 2019 is expected to be £52.4m, 51% higher than the figure of £34.8m in the previous 12 months.
The firm said within the figure was 15% organic revenue growth.
Adjusted profit before tax is anticipated to be slightly ahead of market expectations at £9.7m, a 102% increase from the £4.8m reported for the year ended 30 April 2018.
The firm said cash conversion has been higher than normal, “resulting in excellent cash generation and a year-end net debt position of £14.1m, which is significantly better than market expectations of £17.8m”.
Knights floated on 29 June 2018 on 145p and closed on 31 December at 175p. Its shares have risen sharply this year, closing up 4% yesterday at 295p. The price went as high as 311p in March.
It said the organic growth was in part driven by a “successful recruitment drive” in the second half of the year.
The acquisitions were Turner Parkinson in Manchester, Leicester firms Spearing Waite and Cummins Solicitors, and most recently Oxfordshire practice BrookStreet des Roches [1].
“All four have now been fully integrated onto Knights’ IT systems, are performing well, in line with our expectations, and provide strong platforms from which to grow in their respective regions,” investors were told.
Earlier this year, chief executive David Beech told Legal Futures [2] that the firm was set up to handle four “mainstream” acquisitions a year, plus occasional niche deals like Cummins, a specialist employment firm.
He said yesterday: “We continue to deliver on our strategy, both organically and through selective acquisitions, resulting in strong, cash generative, profitable growth.
“Our successful recruitment drive and selective acquisitions during the year also provide us with a strengthened platform delivering high-quality services through a results-driven and collaborative culture with more diversified expertise across a broader geographical base.
“We, therefore, look forward with confidence to the current year and beyond.”