Full Year Results
Summary by AI BETAClose X
Knights Group Holdings plc
("Knights" or the "Group")
Full Year Results
Strategic progress driving double digit profit growth
Knights, the national legal and professional services business, today announces its full year results for the year ended 30 April 2025.
Financial highlights
· Revenue increased by 8% to £162.0m (FY24: £150.0m)
· Gross margin up 170 bps to 50.5% (FY24: 48.8%)
· Underlying EBITDA 7 up 11% to £42.9m (FY24: £38.7m) a 70bps increase in margin to 26.5% (FY24: 25.8%)
· Underlying PBT1 up 11% to £28.0m (FY24: £25.3m); a 40 bps increase in margin to 17.3% (FY24: 16.9%)
· Underlying basic EPS2 increased 10% to 23.95p (FY24: 21.81p)
· Reported PBT of £12.3m (FY24: £14.8m) and Basic EPS of 8.83p (FY24: 11.47p) primarily impacted by increased non underlying acquisition related costs
· Lock up3 days normalised to 86 (FY24: 78 days, FY23: 87, FY22: 86), with debtor days remaining industry leading at 31 (FY24: 28 days)
· Strong cash conversion4 of 130% (FY24: 131%), facilitating continued growth
· Net debt5 of £64.8m (30 April 24: £35.2m), after £25.1m of acquisition consideration; EBITDA / net debt banking covenant ratio of 1.6x (30 April 2024: 1.1x)
· Final dividend of 3.05p (FY24: 2.79p), giving a 9.3% increase in the total dividend to 4.81p (FY24: 4.40p)
Strategic and operational highlights
Recruitment momentum and operational excellence positions us well for future organic growth
· Recruited 51 senior fee earners, 28% more than in FY24 (40), reflecting the appeal of our corporatised model and exceptional reputation, scale, and culture
· Churn6 reduced to 10% in H2, significantly lower than industry average driven by engagement activity initiatives across the business
· Strong client wins; clients attracted to and benefitting from increasingly diverse service offering
· Good pricing discipline combined with a continued focus on cost optimisation and operational excellence
Executing on our value-accretive acquisition strategy including our largest acquisition to date
· Significantly increased scale through two high-quality acquisitions in our key growth markets, adding 247 fee earners to the Group and broadening our service offering
o Acquired Thursfields Legal Limited, cementing Knights' leading position in the Midlands
o Significantly scaled up our South East presence with IBB Law LLP, our largest acquisition to date
· Both acquisitions are integrating well and trading in line with expectations
· Post period end, acquired Birkett Long LLP, extending our legal and wealth advisory services, and Rix & Kay LLP, strengthening our Kent and Sussex footprint
Current trading and outlook
· Trading at the start of the current year is encouraging and in line with expectations
· Increasing numbers of high quality people and firms continue to join Knights
· Financial headroom to build on strong acquisition track record
· Confident in further profitable growth in FY26 and the medium-term
David Beech, CEO of Knights, commented:
"Our proven strategy continues to deliver, as shown by our double-digit profit growth and enhanced margins during the year, despite ongoing macroeconomic challenges.
"This has been a year of step changes for the business, with strategic progress and a strengthened leadership team embedding enhanced operational discipline - all underpinning the Group's platform for future growth. We have built strong recruitment momentum and reduced churn, while advancing our value-accretive acquisition strategy - including our largest acquisition to date in the second half - and continuing to win new clients.
"We have started the current financial year in line with our expectations and are well positioned to seize the opportunities presented by the structural trends in our industry. We are now benefitting from increased recognition of our differentiated proposition as a leading brand, which combines national scale and premium services with local presence and relationships.
"We expect growth in FY26 to be supported by the momentum we have seen building through attracting and retaining high calibre professionals and clients, complemented by building on our strong acquisition track record, with an encouraging current pipeline of opportunities under consideration. We, therefore, continue our focus on delivering profitable growth through the year and in the medium-term, as we build and extend our services across the UK."
Footnotes
1 Underlying PBT excludes amortisation of acquired intangibles, non-underlying operating expenses, and non-underlying finance costs. Non-underlying operating expenses include transaction and onerous lease expenses, contingent acquisition payments, disposal of acquired assets, along with one-off restructuring and professional expenses, mainly incurred on acquisitions, through streamlining support functions or strategic reorganisations.
Contingent acquisition payments are treated as a non-underlying expense as this represents payments for acquisitions which are dependent on the continued employment of certain individuals in the business for an agreed contractual period after an acquisition of one to three years to preserve the acquired goodwill and customer relationships. Accounting standards require such arrangements to be treated as remuneration in the Statement of Comprehensive Income. However, the individuals also receive market rate salaries, therefore, if not separately identified, these payments would significantly distort the reported results.
2 Underlying EPS is underlying PAT divided by the weighted average number of ordinary shares in issue.
3 Lock up is calculated as the combined debtor and WIP days as at a point in time. Debtor days are calculated on a count back basis using the gross debtors at the period end and compared with total fees raised over prior months. WIP days are calculated based on the gross work in progress (excluding that relating to clinical negligence claims, insolvency, and ground rents, as these matters operate mainly on a conditional fee arrangement and a different profile to the rest of the business) and calculating how many days billing this relates to, based on average fees (again excluding clinical negligence claims, insolvency, and ground rents fees) per month for the last 3 months. Lock up days excludes the impact of acquisitions in the last quarter of the reporting period.
4 Cash conversion is calculated as the total of cash from operations, less tax paid and underlying IFRS 16 net lease payments, divided by underlying profit after tax.
5 Net debt includes cash and cash equivalents, borrowings and acquired debt but excludes lease liabilities.
6 Churn is calculated based on the number of qualified fee earners who had been employed by the Group for more than one year. Churn is calculated taking the number of leavers in the above group over the financial year as a percentage of the average number of colleagues for the year. Churn excludes expected churn from acquisitions in the year of acquisition and the first full year post acquisition. Retention is 100% less the churn rate.
7 Underlying EBITDA is operating profit before depreciation, amortisation and non-underlying operating expenses as defined above.
8 Underlying PAT is underlying PBT less any tax in respect of underlying items.
9 Underlying EBITDA post IFRS 16 is used as a metric as this reflects the profits after deduction of rental costs which is most comparable to the EBITDA reported at IPO, before the introduction of IFRS 16.
These footnotes apply throughout the RNS
Enquiries
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Knights |
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David Beech, CEO Kate Lewis, CFO |
Via MHP |
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Deutsche Numis (Nomad and Broker) |
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Stuart Skinner, Kevin Cruickshank |
020 7260 1000 |
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MHP (Media enquiries) |
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Katie Hunt, Eleni Menikou, Lucy Gibbs |
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Notes to Editors
Knights is a fast-growing, legal and professional services business, ranked within the UK's top 50 largest law firms by revenue. Knights was one of the first law firms in the UK to move from the traditional partnership model to a corporate structure in 2012 and has since grown rapidly. Knights has specialists in all key areas of Corporate and Commercial law and Private Wealth services. It is focussed on key UK markets outside London and currently operates from 32 offices located in Ascot, Basildon, Beaconsfield, Birmingham, Brighton, Bristol, Cardiff, Carlisle, Chelmsford, Cheltenham, Chester, Colchester, Exeter, Kings Hill, Leeds, Leicester, Lincoln, Manchester, Newcastle, Nottingham, Oxford, Portsmouth, Reading, Sheffield, Solihull, Stoke, Teesside, Uxbridge, Weybridge, Wilmslow, Worcester and York.
Chairman's statement
I am pleased to present Knights' results for FY25.
During my time as Chair, I have witnessed first-hand the key elements that differentiate us from our traditional peers. There is a distinctive collaborative culture, facilitated by the Group's corporate model, and thanks to concerted efforts within the business, an embedded 'one team' mindset. As a result, Knights has been able to attract high quality talent, through both recruitment and acquisitions, enabling it to become one of the leading national legal and professional services providers, operating throughout the UK regions and delivering comprehensive, premium solutions to clients, locally.
These strengths, combined with the tireless dedication of our talented professionals and executive management team, have driven a good performance with strong profit growth, despite an uncertain macroeconomic environment. The Group achieved an 11% increase in underlying profit before tax ("UPBT") to £28 million, reflecting improved margins on revenue of £162.0 million, an 8% increase from FY24.
On behalf of the Board, I would like to express our gratitude to our dedicated colleagues, for their efforts in achieving this success, and to our clients and shareholders for their continued support.
A strategy that continues to deliver
Our strategy has driven remarkable growth since our IPO, with the management team and business support teams continuing to execute it well throughout the year. The Group continued to build its platform through acquisitions which, combined with driving operational efficiency, and recruiting top talent, positions us favourably for organic growth and operational leverage in the coming year.
High quality talent continues to be attracted to Knights' friendly and supportive culture, with an increasing number of professionals joining the business during the year.
We added significant scale through two high quality acquisitions during the year, which brought a total 247 fee earners to the Group and further expanded our range of services. In the first half, we acquired Thursfields Legal Limited (Thursfields), enhancing our Midlands presence. In the second half, we significantly expanded our South East presence by acquiring IBB Law LLP. Post period end we have acquired Birkett Long LLP, extending our legal and wealth advisory services and Rix & Kay LLP, strengthening our Kent and Sussex footprint. We have also acquired Le Gros Solicitors Limited adding a team of 6 professionals to build on our recent partner appointments in Cardiff.
As part of Knights, these acquisitions benefit from our well-developed infrastructure from day one, and will provide strong platforms for ongoing recruitment and growth. On behalf of the Board, I would like to welcome all our new colleagues that have joined Knights during the year and to thank all at Knights for the hard work that has resulted in such seamless integration of all our acquisitions.
We are well-positioned financially to continue our growth strategy, through hiring talented individuals, opening new offices, and selectively pursuing value enhancing acquisitions.
Dividend Policy
The Group's dividend policy, to distribute 20% of underlying profit after tax, balances profit retention to support our long-term growth strategy with shareholder returns as our growth strategy continues to yield positive results. The Board proposes a final dividend of 3.05p, which, along with the interim dividend of 1.76p per share, totals a 4.81p dividend for the year, a 9.3% increase from FY24's 4.40p. The dividend is scheduled for payment on 7 November 2025 to shareholders recorded on 10 October 2025, pending shareholder approval at the Group's AGM.
Summary
The Board is pleased with the Group's performance and the step changes made during the year - with significant strategic progress, operational discipline and a strengthened and well-embedded leadership team in place - all enhancing the platform for future growth. We, therefore, continue our focus on driving further profitable growth, as we benefit from ongoing recruitment momentum, acquisition opportunities and client wins, and as we continue to expand across the UK.
Chief executive's review
Our proven strategy has continued to deliver, as demonstrated by the Group reporting an excellent profit performance and enhanced margins, despite a macroeconomic backdrop that remains challenging. We have strong momentum in recruitment which, coupled with significantly increased retention in the second half of the year, will drive future growth, and we have continued to execute our value-accretive acquisition strategy, including making our largest acquisition to date in the second half of the year.
Knights is one of the largest legal services businesses outside London and is now benefitting from growing recognition of our national brand - with professionals, sellers of law firms, and clients attracted to our differentiated proposition which combines a national scale provider of a broad range of premium services with a local presence and relationships.
We built on our progress in the first half, with positive momentum in the latter part of the year. We continued to scale and expand our national footprint through selective acquisitions, enhancing our presence in key growth markets, in the West Midlands, and we significantly strengthened our footprint in the attractive South East market. All acquisitions during the period, and prior year acquisitions, are integrating well and performing as anticipated.
Knights' strong reputation, increasing scale, and differentiated corporate model and collaborative culture, continue to attract new, and support the retention of, high quality talent across the business. We recruited 28% more senior fee earners in the year, compared to prior year, with all new recruits, including those that join via acquisition, now undertaking their inductions at our refurbished Stoke office, the central hub of our business. This is supporting seamless integration into the business and embedding the core aspects of our unique, collaborative culture and model from day one.
Our internal measure of churn6 reduced significantly, to just 10% in the second half of the year, which we believe to be significantly lower than the industry average. The maturity and settled nature of our business is reflected in the achievement post year end of an employee NPS score of +59.
Clients continue to be attracted to Knights' increasingly diverse services offering, with several key wins and clients being able to benefit from our increasing range of services, which is testament to our relentless dedication to high quality client service. Optimising costs and operational excellence also remain a key focus and have supported our strong profit performance.
A strong performance, marking an inflection point
Knights delivered another consecutive year of double-digit profit growth, and continued to scale the business at pace, despite the effect of ongoing macroeconomic uncertainty on business confidence.
Total revenue for the year was £162.0m, an 8% increase compared with the previous year (FY24: £150.0m), driven primarily by acquisitions. We maintained organic revenues across our balanced portfolio and service lines and locations. While growth from recruitment was held back by a period of higher churn coming into the first half of the financial year, the reduction in churn during the second half means the business is now well-positioned for increased organic revenue growth.
Pricing discipline - with sustained and consistent annual rate increases - combined with driving efficiencies and cost optimisation across the Group, remain key priorities and drivers of our strong profit performance.
We have also realised synergies from the effective integration of acquired businesses, building on our strong track record of generating value from acquisitions.
Our debtor days remain industry-leading, at 31 as at 30 April 2025 (30 April 2024: 28), reflecting our commitment to disciplined working capital management.
This financial discipline, alongside strategic recruitment, and driving new business and stronger client relationships are cultivated across the business by our Client Services Directors ("CSDs") in their respective regions, and we recently appointed a Group Client Service Director to oversee and support the regional CSDs. With most of this team now having been in place for a number of years, the business now benefits from their greater experience in managing the business and leading a high-performance culture.
Growing from a strong foundation
Knights' model, pioneering when established 13 years ago, is now increasingly emulated across the professional services sector. For us, it continues to be a differentiator and key to attracting talent. It remains a compelling alternative to the traditional partnership model, which increasingly faces structural challenges and is no longer attractive to a new generation of talent unwilling to make a financial commitment to the firm and wishing to work in a supportive, high calibre firm with a strong platform built around broad-based services and a mature, centralised operational infrastructure.
This has helped us bring 51 new senior fee earners into the Group during the year (FY24: 40), attracted not only by our modern, corporatised model, but also Knights' excellent reputation, scale, and strong culture which prioritises collaboration, excellence and a clear commercial mindset.
Our increased coverage nationwide means we can now also access a wider pool of talent and is enabling us to selectively explore opportunities to open offices organically, adjacent to regions where we are already strong. For instance, we are currently establishing a presence in Cardiff, where we have already employed ten partners, aided by the city's proximity to our offices in Bristol and Cheltenham. This expansion will accelerate further as we open an office in the city in September 2025. Our ability to grow in this way is testament to the heightened awareness and reputation of Knights across the UK and we expect to open further such offices in the future.
Importantly, the initiatives we have driven through the business to increase mentoring from our Client Services Directors, face to face time in the offices, and regular forums for Partners and Senior Associates to come together in our Stoke office is supporting a stronger team culture and better understanding of the breadth of our services and our business strategy. We are pleased that this has resulted in a substantial step down in churn in the second half of the year to 10% (15% across the full year), a level we expect to become more normalised as we continue to engage with the team in this way. Bringing our most experienced people together is also supporting greater cross-collaboration, with colleagues increasingly forming teams across different offices to deliver the best possible solutions to clients.
We continue to embrace technology, and are monitoring rapid advances in areas such as AI closely. Post year end, we have recruited a Chief Information and Technology Officer, John Earl, who has over 23 years' experience working with global organisations, to further optimise our data and technology use. Building on our years of experience in developing solutions built on automation, systemisation and workflows, where we remain a sector leader, we are now exploring and deploying a number of AI-enabled tools and are exploring further AI tools and platforms for other commercial uses, remaining mindful of sensitivities, including security, and taking a measured approach to ensure we remain at the forefront of developments without compromising our robust systems, whilst selecting the most appropriate technologies.
Executing our value-accretive acquisition strategy
The regional legal services market remains highly fragmented, with numerous opportunities for consolidation. In line with our strategy to bolster future organic growth through selective, value-accretive acquisitions, during the year we acquired two high-quality law firms. As well as aligning culturally with the Group and adding to existing service lines across the business, these acquisitions allowed us to expand in growth areas such as Private Wealth and explore adjacencies such as wealth advisory services. As part of Knights, acquired firms can accelerate growth by broadening their offering to clients and leveraging the strength of Knights' well-invested central infrastructure, which is increasingly valuable given the more onerous regulatory, technology and cost burdens facing independent firms.
In the first half, we acquired Thursfields, a premium, full service legal services business with offices across the West Midlands, and a national client base which now benefits from access to Knights' broad range of services and established platform.
Thursfields has offices in Worcester, Solihull and Birmingham, and a strong Private Wealth offering, spanning Private Client, Family and Residential Property, alongside Corporate, Real Estate and Dispute Resolution. The acquisition has cemented Knights' position as a leading legal and professional services business in the Midlands and added 86 fee earners to the Group.
Building scale in the attractive South East market
In the second half, the Group scaled up significantly in the areas immediately surrounding London.
We acquired IBB Law LLP, a premium service law firm based in the South East, with locations in Uxbridge, Beaconsfield, Reading and Ascot, providing proximity to areas of inward investment and major corporate clusters. The acquisition, Knight's largest to date, complements Knights' existing offices in Oxford and Weybridge, enhancing our presence in the region and adding 161 fee earners.
All acquisitions acquired during the year have integrated well and are performing to plan.
Post period end we have also acquired Birkett Long LLP, a premium service regional law firm and independent financial advisory business based in three locations across Essex, in Colchester, Chelmsford and Basildon. With a leading position in the region, the acquisition brought a team of 98 fee earners to Knights, with an equal split between service lines for business and private clients. Birkett Long IFA LLP, a separate legal entity, which has been established for 30 years, brought a team of 13. Together, they provide the unique ability to offer both legal and wealth advisory services under one roof and have provided an entry point into financial advisory for the Group, which we have long considered a complementary service line and growth opportunity.
We have also acquired Rix & Kay LLP, a firm with a strong reputation across Kent and Sussex, building on recent expansion in Essex and the Thames Valley. The business has particular strength in Corporate, Commercial Property, Disputes and Private Client work. The 27 fee earners joining via the acquisition will relocate to existing Knights offices in Brighton and Kings Hill.
In August 2025 we acquired Le Gros Solicitors Limited, adding a team of six professionals to our recent partner appointments in Cardiff.
We continue to assess a solid pipeline of opportunities across a growing number of legal and professional services firms seeking integration into a large, well-established group.
In November 2024 we extended our existing revolving credit facility to provide total committed funding of £100m until November 2027. With these extended facilities, the Group is in a strong financial position with sufficient headroom and flexibility to enable us to continue to execute our growth strategy.
Current trading and outlook
Trading in the early part of the current year has been in line with our expectations. We are seeing the benefits of our maturity and growth to date, with increased levels of recruitment alongside reduced churn positioning us well to deliver future growth.
We are also well positioned to seize the opportunities presented by structural trends in our industry. Knights is reaching an inflection point in terms of scale, the breadth of our service offer and operational excellence. An increasing number of people are joining our teams, and we are consistently adding high quality acquisitions to the Group, which expand our opportunities for organic growth. We have financial headroom to build on our strong acquisition track record and have an encouraging pipeline of active opportunities under review.
As such we expect FY26 trading to be supported by the momentum we have seen building through the year, particularly the improvement in churn during the second half. We have a strong team of Client Services Directors, who are playing an increasingly vital role in both people and client acquisition, as well as continuing to embed strong operational discipline. We are, therefore, confident in further growth through the year and in the medium-term, complemented by our value-accretive acquisition strategy.
Financial review
CFO Review
I am pleased to report another year of profitable, cash generative growth with revenue of £162.0m, up 8% compared to the prior year (FY24: £150.0m) and underlying EBITDA7 increasing by 11% to £42.9m (FY24: £38.7m).
Reported profit before tax (PBT) fell to £12.3m (FY24: £14.8m) due to increased non underlying costs driven primarily by large acquisitions being completed in the year resulting in higher one-off costs from both the acquisitions and subsequent integration and restructuring processes.
Our continued disciplined approach to the management of lock up3 has generated excellent cash conversion4 of 130% for the year (FY24: 131%) enabling us to fund our continued growth strategy.
An increase in recruitment during the year and two complementary acquisitions, the second of which is the largest acquisition to date for the Group, have enabled us to deliver these positive results despite the continued uncertainty in the macro-economic environment throughout the period.
Financial results
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Year ended 30 April 2025
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Year ended 30 April 2024
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% change
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Revenue |
161,966 |
149,957 |
8% |
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Other operating income |
9,649 |
10,439 |
(8%) |
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Staff costs |
(97,607) |
(93,007) |
5% |
|
Other operating charges |
(29,839) |
(28,218) |
6% |
|
Impairment of trade receivables and contract assets |
(1,241) |
(489) |
154% |
|
Underlying EBITDA7 |
42,928 |
38,682 |
11% |
|
Underlying EBITDA % |
26.5% |
25.8% |
|
|
Depreciation charges under IFRS 16 |
(5,223) |
(5,607) |
(7%) |
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Finance costs under IFRS 16 |
(2,249) |
(1,471) |
53% |
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Underlying EBITDA post IFRS 16 charges |
35,456 |
31,604 |
12% |
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Depreciation and amortisation charges (excluding amortisation on acquired intangibles) |
(3,617) |
(2,903) |
25% |
|
Investment income |
58 |
- |
- |
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Underlying finance charges (excluding IFRS 16) |
(4,133) |
(3,402) |
21% |
|
Underlying finance income |
239 |
23 |
939% |
|
Underlying profit before tax1 |
28,003 |
25,322 |
11% |
|
Underlying profit before tax margin |
17.3% |
16.9% |
|
|
Underlying tax charge |
(7,448) |
(6,598) |
13% |
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Underlying profit after tax8 |
20,555 |
18,724 |
10% |
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Underlying basic EPS (pence) 2 |
23.95 |
21.81 |
10% |
Revenue
Reported revenue for the year is £162.0m compared to £150.0m in FY24, an increase of 8%.
Of this increase, £12.5m was generated from acquisitions made during the year, with revenues from acquisitions made in FY24 remaining static in FY25, meaning that total organic revenues have reduced by £0.5m in the year.
Organic revenues
In the second half of FY24 we made the strategic decision to significantly reduce our restructuring and insolvency team. This led to a reduction in revenues of c.£0.8m in FY25 compared to FY24. Excluding the effect of this strategic reduction in revenue, organic revenue grew by £0.3m in the year.
Whilst some areas of the Group demonstrated strong organic growth e.g. CL Medilaw and residential property, other areas such as corporate and private client work declined due to macro-economic factors and churn within the business in FY24 and the first half of FY25.
Despite this, leading indicators of future organic growth have been improving particularly in the second half of the year with improvements in pricing, recruitment of senior fee earners with a strong client following and a significant reduction in churn levels.
Revenue from acquisitions
At the start of FY24 we acquired Baines Wilson and St James Law. Combined revenues in FY25 have remained broadly in line with FY24. Both acquisitions have also delivered organic growth with the Newcastle office acquired as part of the St James Law acquisition recruiting 10 senior fee earners (senior associates and partners) since acquisition.
The acquisitions of Thursfields Legal Limited and IBB Law LLP completed during the year. Both acquisitions are fully integrated onto the central business systems and are performing as expected contributing £12.5m of revenue since acquisition.
Staff costs
Total staff costs of £97.6m (FY24: £93.0m) have decreased as a percentage of revenue to 60.3% (FY24: 62.0%) reflecting the continued discipline on cost control whilst investing in the future growth of the business through recruitment of quality fee earners. During FY25 we invested in the continued recruitment of partners and senior associates with strong client relationships and in our business services team and management to ensure the Group is well placed to support future growth.
Direct staff costs
Fee earning staff costs have reduced to 49.5% of revenue (FY24: 51.2%). The leveraging of these costs reflects the reduction in organic staff numbers through churn in FY24 and the first half of this financial year. This improvement in gross margin to 50.5% (FY24: 48.8%) reflects higher fees per fee earner, control of fee earner costs and improvement in pricing.
Whilst managing our costs we have continued to invest in the recruitment of senior fee earners to support our future organic growth with 51 new senior fee earners being recruited organically during the year compared to 40 in FY24. Excluding the drag on gross margin from the investment in new recruits, gross margin for the year would be over 51%, due to the increased recruitment in the year and the time taken for new recruits to be operating at run rate income and gross margin levels.
Support staff costs
Non fee earner staff costs have remained at 10.8% of revenue in the year (FY24: 10.8%) as we continue to invest in our management structure whilst leveraging our support staff costs and ensuring we have the sustainable business services platform in place to support our future growth.
Other operating charges
Other operating charges of £29.8m have reduced to 18.4% of revenue (FY24: 18.8%), leveraging our cost base through disciplined cost control and the full year impact of the work undertaken in the last 18 months to consolidate supplier contracts and maximise synergy savings from acquisitions.
Other operating income
Other operating income has decreased to £9.6m from £10.4m driven by a decrease in interest earned on client monies held due to lower interest rates in the year.
Underlying EBITDA7
Underlying EBITDA7 excludes non-underlying operating expenses. These expenses include non-recurring transaction and onerous lease expenses, contingent acquisition payments and one-off restructuring and professional expenses mainly incurred in the streamlining of support functions or strategic reorganisations. The Board considers this to be a key metric to measure the underlying business performance.
Contingent acquisition payments are treated as a non-underlying expense as this represents payments for acquisitions which are dependent on the continued employment of certain individuals in the business for an agreed contractual period after an acquisition of one to three years, to preserve the goodwill and customer relationships. Accounting standards require such payments to be treated as remuneration in the Statement of Comprehensive Income. However, the individuals also receive market rate salaries, therefore, if not separately identified, these payments would significantly distort the reported results.
During the year, underlying EBITDA increased by £4.2m to £42.9m (FY24: £38.7m) representing an increase in margin to 26.5% (FY24: 25.8%) driven mainly by the increase in gross margin in the period as well as leveraging other costs.
IFRS 16 Depreciation and finance charges
The IFRS 16 rental and finance expenses represents the accounting charge in respect of all leases with a term of over one year. Although during the year total charges have increased to £7.5m (FY24: £7.1m), costs as a percentage of revenue have reduced from 4.7% of revenue in FY24 to 4.6% of revenue in FY25 as we continue to manage our property portfolio to optimise our space wherever possible.
Depreciation and amortisation charges
The increase in depreciation and amortisation charges in the year to £3.6m (2.2% of revenue) from £2.9m (1.9% of revenue) in FY24 is a result of continued investment in property upgrades and refurbishments to support the growth of the business.
Finance charges
Finance charges increased by £0.7m in the year to £4.1m (FY24: £3.4m) driven mainly by increased drawn balances on our RCF facility to fund acquisitions during the year.
Underlying profit before tax (PBT)1
Underlying profit before tax excludes amortisation of acquired intangibles, transaction, and onerous lease expenses in relation to acquisitions, contingent acquisition payments, disposals of acquired assets, one-off restructuring and professional costs mainly incurred in the streamlining of support functions or strategic reorganisations.
Underlying PBT has been calculated as an alternative performance measure (see note 39 of the financial statements) to provide a more meaningful measure and year on year comparison of the profitability of the underlying business.
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Year ended 30 April 2025 |
Year ended 30 April 2024 |
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Profit before tax |
12,269 |
14,831 |
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Amortisation on acquired intangibles |
4,033 |
3,580 |
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Contingent acquisition payments treated as remuneration |
3,752 |
2,824 |
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Other non-underlying costs |
7,949 |
4,087 |
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Underlying profit before tax1 |
28,003 |
25,322 |
Total Group underlying PBT has increased by 11% to £28.0m (FY24: £25.3m).
The underlying profit before tax margin in the year increased to 17.3% from 16.9% in FY24 primarily from an increase in gross margin offset by a reduction in other income and an increase in interest payable.
Reported profit before tax (PBT)
Reported PBT for the year has reduced to £12.3m in the year (FY24: £14.8m) due to an increase in non-underlying operating and finance costs from £6.9m in the prior year to £11.7m in FY25.
Non underlying operating costs have increased in the year due to two larger acquisitions completed during the year resulting in £1.7m increased restructuring and transaction costs and a £1.0m increase in the charge to the Consolidated Statement of Comprehensive Income, in relation to contingent acquisition payments treated as remuneration under IFRS. There was also a one-off £2.1m charge in relation to impairment of right of use assets in relation to Worcester, Leicester and Newbury offices where offices have been relocated or merged into other Group offices. This has enabled us to focus on rationalisation of the property portfolio. There were also higher levels of transaction related costs and contract termination costs given the larger acquisitions completed during the year compared to the prior year.
Taxation
The taxation charge for the year is £4.7m (FY24: £5.0m) made up of a current tax charge of £4.9m (FY24: £5.2m) partially offset by a deferred tax credit of £0.2m (FY24: £0.2m) giving an increased effective rate of tax for the Group of 38% (FY24: 34%). The increase in effective rate compared to prior year and compared to the UK corporation tax rate of 25% is due to increased disallowable expenses, mainly contingent acquisition payments.
The effective rate of tax on the underlying profit of the Group is 27% (FY24: 26%).
Earnings per share (EPS)
Basic EPS in the period decreased by 23% to 8.83p per share (FY24: 11.47p per share) due to the reduction in reported profits after tax driven by the increased non-underlying costs as explained above. To aid comparison of EPS on a like for like basis, underlying EPS2 has also been calculated based on the underlying profit after tax, calculated as set out below.
|
|
Year ended 30 April 2025
|
Year ended 30 April 2024
|
|
Operating profit before non-underlying charges and amortisation on acquired intangibles |
34,088 |
30,172 |
|
Investment income |
58 |
- |
|
Finance costs |
(6,445) |
(4,939) |
|
Finance income |
302 |
89 |
|
Underlying profit before tax1 |
28,003 |
25,322 |
|
Taxation - underlying |
(7,448) |
(6,598) |
|
Underlying profit after tax8 |
20,555 |
18,724 |
The underlying basic EPS2 has increased by 10% to 23.95p for the year (FY24: 21.81p). The weighted average number of shares used to calculate the basic EPS in the year was 85,813,426.
Considering the dilutive impact of potential share options, the diluted EPS for FY25 is 8.43p per share (FY24: 11.11p per share). Underlying diluted EPS has increased by 8.3% to 22.88p per share (FY24: 21.13p per share).
Dividend
The Board continues to adopt a progressive dividend policy balanced with its commitment to continue to invest in the future growth potential of the business. Subject to approval at the Annual General Meeting in October 2025 the Board proposes a final dividend of 3.05p per share. This together with the interim dividend of 1.76p per share brings the total dividend in respect of FY25 to 4.81p per share (FY24: 4.40p per share) representing an increase of 9.3%.
Balance Sheet
|
|
30 April 2025 |
30 April 2024 |
|
Goodwill and intangible assets |
105,873 |
86,900 |
|
Right of use assets |
46,635 |
34.034 |
|
Investment in joint venture |
111 |
50 |
|
Loan to joint venture |
2,000 |
2,523 |
|
Property, plant and equipment |
23,685 |
14,896 |
|
Assets and liabilities held for sale |
394 |
- |
|
Working capital |
64,640 |
53,125 |
|
Other provisions and deferred tax |
(20,272) |
(14,590) |
|
Lease liabilities net of lease receivables |
(52,529) |
(38,573) |
|
|
170,537 |
138,365 |
|
Cash and cash equivalents |
5,853 |
5,453 |
|
Borrowings |
(70,682) |
(40,617) |
|
Net debt5 |
(64,829) |
(35,164) |
|
Deferred consideration |
(1,175) |
(2,941) |
|
Net assets |
104,533 |
100,260 |
The Group's net assets as at 30 April 2025 increased by £4.2m to £104.5m (FY24: £100.3m) primarily reflecting profit for the year net of dividends paid in the period being £3.9m and £0.6m relating to the net impact of share based payment movements and purchase of own shares into the Employee Benefit Trust incorporated in the year. The key movements in the Balance Sheet are discussed in more detail below.
Goodwill and intangible assets
Goodwill and intangible assets includes £32.8m of intangible assets relating to the Knights brand and customer relationships from current and prior year acquisitions. Purchased computer software amounts to £0.2m with the remaining balance of £72.9m relating to goodwill from acquisitions.
The Board carries out an impairment review of goodwill each year to ensure the carrying value in the financial statements is supportable. The value in use of the goodwill was calculated using a number of different scenarios, some of which assumed a considerably more negative outcome than is anticipated by the Directors. In all instances, the future trading of the business was more than sufficient to justify the carrying value of goodwill. Therefore, as at 30 April 2025, the Board is satisfied that the goodwill was not impaired.
Investment in, and Loan to joint venture
The investment in joint ventures includes £0.08m relating to the joint venture with Convex entered into in FY24 (being the initial £0.05m invested plus share of assets recognised in the year) and £0.03m relating to a joint venture with Kubera Wealth acquired as part of the IBB Law LLP acquisition in the year.
Property, plant and equipment
During the year the Group has continued to invest in its property infrastructure and business platform ensuring that the platform is well able to support our future growth plans.
We continued to invest in our technology and IT systems, investing £2.2m in the year (FY24: £1.4m).
During FY25 we have also continued to invest in our property portfolio, refurbishing existing and acquired offices to ensure we offer the same high quality grade A office space across the Group. Investment in the refurbishment of offices was higher than normal in FY25 at £9.6m mainly driven by the refurbishment of our central hub in Stoke where we invested £5.8m. Our central hub is key to us working as one team and allows us to collaborate with and train our colleagues in a high-quality central location which we consider key to cementing and developing our one team culture. As we grow our office footprint through organic openings and acquisitions, providing high quality space will remain a key differentiator to our regional competitors.
This investment in property and technology together with assets acquired as part acquisitions, net of disposals and depreciation has resulted in a net increase in our tangible fixed assets of £8.8m to £23.7m as at 30 April 2025 (30 April 2024: £14.9m).
Working capital
Working capital is calculated as follows:
|
|
30 April 2025 |
30 April 2024 |
|
Contract assets |
50,998 |
40,191 |
|
Trade and other receivables |
39,552 |
32,753 |
|
Corporation tax receivable |
882 |
304 |
|
Total current assets |
91,432 |
73,248 |
|
Trade and other payables |
(26,662) |
(19,935) |
|
Contractual liabilities |
(130) |
(188) |
|
Total current liabilities |
(26,792) |
(20,123) |
|
Net working capital |
64,640 |
53,125 |
Net working capital has increased to £64.6m as at 30 April 2025 (30 April 2024: £53.1m), an increase of £11.5m or 22% from the prior year. This increase is mainly driven by additional working capital from acquisitions together with an increase in contract assets at the year end. Based on run rate revenues for FY25 of £181m and FY24 of £150m (taking account of the full year impact of acquisitions) working capital represents 35.7% of revenue in FY25 compared to 35.4% in FY24.
Trade and other receivables as a percentage of run rate revenue have increased slightly to 22.0% (FY24: 21.8%) due to increases in prepayments driven by timing of invoices received pre year end. Trade and other payables have also increased as a percentage of run rate revenue mainly due to accruals inherited from the acquisition of IBB Law LLP.
Contract assets have increased by £10.9m to £51.0m as at 30 April 2025 (30 April 2024: £40.1m). The main reasons for the increase in contract assets are the acquisitions completed during the year, which added £6.3m of contract assets at the point of completion, and the continued growth of our CL Medilaw business, which holds higher levels of work in progress than the rest of the Group due to the nature of work done. Despite the increase in total contract assets in the CL Medilaw business, the total level of contingent work in progress at the year end has decreased marginally compared to the prior year.
The management of working capital continues to be a fundamental KPI for the Group with strong systems and controls in place to manage the levels of trade receivables and work in progress across the Group. The time taken to convert a unit of time incurred into cash is reported as the number of lock up3 days for the Group and is a KPI monitored by the Board, Client Services Directors and wider management team. As at 30 April 2025 lock up3 was 86 days (30 April 2024: 78 days), an increase of 8 days from the exceptional result achieved in FY24 but still in line with FY23, 87 days, and FY22, 86 days, and our internal target of 90 days.
Due to the disproportionate amount of time that it takes to conclude certain types of work, such as our CL Medilaw, Real Estate Investment and Insolvency matters these work types are excluded from our WIP days calculation as exceptions, so as not to distract the majority of the Group from focussing on achieving its excellent lock up3 days. If WIP days were calculated including all valued WIP of the Group this would give WIP days of 81 and hence total lock up with no exclusions of 113 days as at 30 April 2025 (30 April 2024: 113 days).
The bad debt charge for the year has increased to 0.8% (FY24: 0.3%) as a result of a one-off write off during the year (£0.6m) due to an insolvency event.
Right of use assets
The right of use assets capitalised in the Consolidated Statement of Financial Position represents the carrying value of property, equipment and vehicle leases. The increase in the value of right of use assets during the year to £46.6m, from £34.0m as at 30 April 2024, resulted from an increase in assets of £23.4m relating to new leases acquired through acquisitions and the relocation of existing offices to new properties, less disposals and impairment of £5.5m as we terminate existing leases and sublet excess space as part of our ongoing review of the property portfolio, less depreciation of £5.3m for the year.
Lease liabilities net of lease receivables
Lease liabilities net of lease receivables represents the present value of the total liabilities recognised in respect of the right of use assets, net of the present value of all amounts receivable in respect of any subleases of these assets.
The increase in net lease liabilities and receivables in the year to £52.5m from £38.6m as at 30 April 2024, is the net impact of receipts and payments made on existing lease agreements together with the increase in new leases entered into during the year and leases acquired, net of disposals and lease impairments recognised during the year.
Cash conversion4, net debt5, financing and leverage
Cash generation continues to be a key focus for the Board and management team. The Group measures cash by comparing the free cash flow from operations as a percentage of its underlying profit after tax8. As a result of the continued focus on this and specifically the management of lock up3, the Group generated underlying cashflows before capital expenditure of £26.7m during year equating to a cash conversion of 130%.
Cash flow
|
|
Year ended 30 April 2025 |
Year ended 30 April 2024 |
|
Underlying EBITDA7 |
42,928 |
38,682 |
|
Change in working capital |
(5,121) |
(3,549) |
|
Cash outflow for IFRS 16 leases |
(6,515) |
(6,245) |
|
Movement in underlying share-based payment charge |
1,195 |
1,121 |
|
Cash generated from underlying operations (pre-tax) |
32,487 |
30,009 |
|
Tax paid |
(5,820) |
(5,432) |
|
Net cash generated from underlying operating activities |
26,667 |
24,577 |
|
Underlying profit after tax |
20,555 |
18,724 |
|
Underlying cash conversion |
130% |
131% |
The strong cash generation in the year has resulted in net debt5 of £64.8m at the year end (30 April 20024: £35.2m) despite a cash outlay of £25.1m relating to acquisitions and investments in the year along with deferred and contingent acquisition payments paid for acquisitions in prior years. The continued strong cash conversion has also enabled us to invest £11.8m in our property portfolio and systems to ensure we continue to provide high quality infrastructure to support our premium service delivery and future growth strategy.
During the year the business implemented an Employee Benefit Trust to purchase shares in the market. An amount of £0.6m was invested in this during the second half of FY25.
The table below shows a reconciliation of the key cashflows impacting the movement in net debt in the year.
|
|
Year ended 30 April 2025 |
|
Net debt 30 April 2024 |
35,164 |
|
Other net cash (inflows) from operating activities |
(26,764) |
|
Deferred and contingent acquisition payments |
5,187 |
|
Consideration paid for acquisitions in the year (including acquired debt and cash) |
25,145 |
|
Unpaid acquired debt |
1,104 |
|
Non-underlying costs paid |
5,366 |
|
Interest on borrowings |
3,901 |
|
Purchase of own shares |
598 |
|
Dividends paid |
3,903 |
|
Associated lease costs |
264 |
|
Disposal of assets held for sale |
(141) |
|
Joint venture loan capital and interest received |
(734) |
|
Capital expenditure (net of landlord contributions) |
11,836 |
|
Net debt 30 April 2025 |
64,829 |
In November 2024 we renewed and extended our revolving credit facility (RCF) to £100m, committed until November 2027. As at 30 April 2025 the Group has c.£30m headroom in the RCF and is well within all covenants. For banking purposes our leverage as at 30 April 2025 was 1.6 times EBITDA (as defined for covenant purposes). Interest is payable on the loan at a margin of between 1.65% and 2.55% above SONIA dependent on leverage.
The Group is therefore in a strong financial position with sufficient headroom and flexibility within our financing arrangements to enable us to continue to execute our growth strategy.
Capital expenditure
Capital expenditure (net of landlord contributions) during the year was £11.8m (FY24: £7.9m). The increase in the amount spent in the year compared to the prior year is due to the continued review of our property portfolio and the refurbishment of existing and acquired office space as we continue to consolidate our existing portfolio where appropriate, whilst also investing in new and existing space to provide Grade A offices ensuring colleagues benefit from a high-quality working environment. During FY25 we undertook a significant one-off refurbishment of our Stoke central Hub at a cost of c.£5.8m and therefore although we will continue to invest in our IT infrastructure and our property portfolio in FY26 and the medium term, we anticipate capital expenditure to reduce to a more normalised level of c.£6m.
Acquisitions
During the year we completed two acquisitions and also acquired another joint venture as part of the IBB Law LLP acquisition. The table below summarises the impact of these acquisitions and prior acquisitions on the cashflows during the year and in future years. This shows the consideration payable net of any cash in the acquired business.
|
Financial year ended |
Acquisitions of subsids (net of acquired cash) |
Repayment of debt acquired with subsids |
Expected Contingent & deferred acquisition payments |
Expected net cash impact of acquisitions pre year end |
|
2025 |
25.0 |
0.6 |
5.2 |
30.8 |
|
2026 |
- |
1.0 |
6.2 |
7.2 |
|
2027 |
- |
0.3 |
5.0 |
5.3 |
|
2028 |
- |
0.2 |
4.7 |
4.9 |
The above includes estimated contingent acquisition payments disclosed as remuneration in the Consolidated Statement of Comprehensive Income.
Summary
Results for the year to 30 April 2025 reflect a year of continued consolidation and acquisitive growth. We have seen acquisitive growth during the year together with improvements in underlying profitability. Our increasing scale and diversity have provided good resilience against a continuing uncertain macro-economic environment. The reducing churn levels and continued investment in recruitment and business development places the Group in a strong position for the coming year.
Our continued excellent management of cash and extension of our banking facilities has resulted in a strong Balance Sheet with sufficient headroom in our banking facilities to fund future investment and growth.
Consolidated Statement of Comprehensive Income
For the year ended 30 April 2025
|
|
Note |
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Revenue |
5 |
161,966 |
149,967 |
|
Other operating income |
7 |
9,649 |
10,439 |
|
Staff costs* |
8 |
(97,607) |
(93,007) |
|
Depreciation and amortisation charges* |
11 |
(8,840) |
(8,510) |
|
Impairment of trade receivables and contract assets |
|
(1,241) |
(489) |
|
Other operating charges* |
12 |
(29,839) |
(28,218) |
|
Operating profit before non-underlying charges and amortisation on acquired intangibles |
|
34,088 |
30,172 |
|
Amortisation on acquired intangibles |
11 |
(4,033) |
(3,580) |
|
Non-underlying operating costs |
13 |
(11,455) |
(6,630) |
|
Operating profit |
|
18,600 |
19,962 |
|
Investment income |
22 |
58 |
- |
|
Finance costs* |
14 |
(6,445) |
(4,939) |
|
Finance income |
15 |
302 |
89 |
|
Non-underlying finance costs |
13 |
(246) |
(281) |
|
Net finance costs |
|
(6,389) |
(5,131) |
|
Profit before tax |
|
12,269 |
14,831 |
|
Taxation - underlying* |
17 |
(7,448) |
(6,598) |
|
Tax impact of non-underlying costs |
17 |
2,755 |
1,614 |
|
Taxation |
|
(4,693) |
(4,984) |
|
Profit and total comprehensive income for the year attributable to equity owners of the parent |
|
7,576 |
9,847 |
|
|
|
|
|
|
Earnings per share |
|
Pence |
Pence |
|
Basic earnings per share |
|
8.83 |
11.47 |
|
Diluted earnings per share |
|
8.43 |
11.11 |
The above results were derived from the Group's continuing operations.
* Excluding non-underlying items and amortisation on acquired intangibles
Consolidated Statement of Financial Position
As at 30 April 2025
|
|
Note |
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
20 |
72,893 |
61,788 |
|
Intangible assets |
20 |
32,980 |
25,112 |
|
Investments |
22 |
111 |
50 |
|
Property, plant and equipment |
23 |
23,685 |
14,896 |
|
Right-of-use assets |
23 |
46,635 |
34,034 |
|
Finance lease receivables |
26 |
1,335 |
1,633 |
|
Trade and other receivables |
25 |
2,000 |
2,523 |
|
|
|
179,639 |
140,036 |
|
Current assets |
|
|
|
|
Contract assets |
24 |
50,998 |
40,191 |
|
Trade and other receivables |
25 |
39,552 |
32,753 |
|
Finance lease receivables |
26 |
405 |
364 |
|
Corporation tax asset |
|
882 |
304 |
|
Cash and cash equivalents |
|
5,853 |
5,453 |
|
Assets held for sale |
27 |
1,283 |
- |
|
|
|
98,973 |
79,065 |
|
Total assets |
|
278,612 |
219,101 |
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
Equity |
|
|
|
|
Share capital |
28 |
171 |
171 |
|
Share premium |
|
75,277 |
75,262 |
|
Treasury shares |
|
(576) |
- |
|
Merger reserve |
|
(3,506) |
(3,506) |
|
Retained earnings |
|
33,167 |
28,333 |
|
Equity attributable to owners of the parent |
|
104,533 |
100,260 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Lease liabilities |
30 |
48,603 |
35,389 |
|
Borrowings |
31 |
69,807 |
40,149 |
|
Deferred consideration |
32 |
563 |
350 |
|
Deferred tax |
33 |
11,217 |
8,288 |
|
Provisions |
35 |
5,404 |
3,968 |
|
|
|
135,594 |
88,144 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Lease liabilities |
30 |
5,666 |
5,181 |
|
Borrowings |
31 |
875 |
468 |
|
Trade and other payables |
34 |
26,662 |
19,935 |
|
Deferred consideration |
32 |
612 |
2,591 |
|
Contract liabilities |
24 |
130 |
188 |
|
Provisions |
35 |
3,651 |
2,334 |
|
Liabilities held for sale |
27 |
889 |
- |
|
|
|
38,485 |
30,697 |
|
Total liabilities |
|
174,079 |
118,841 |
|
Total equity and liabilities |
|
278,612 |
219,101 |
Consolidated Statement of Changes in Equity
For the year ended 30 April 2025
|
|
Note |
Share capital |
Share premium |
Merger reserve |
Treasury shares £'000 |
Retained earnings |
Total |
|
As at 1 May 2023 |
|
171 |
75,262 |
(3,506) |
|
20,880 |
92,807 |
|
Profit for the period and total comprehensive income |
|
- |
- |
- |
|
9,847 |
9,847 |
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
Credit to equity for equity-settled share-based payments |
9 |
- |
- |
- |
|
1,131 |
1,131 |
|
Dividends |
19 |
- |
- |
- |
- |
(3,525) |
(3,525) |
|
Balance at 30 April 2024 |
|
171 |
75,262 |
(3,506) |
- |
28,333 |
100,260 |
|
Profit for the period and total comprehensive income |
|
- |
- |
- |
- |
7,576 |
7,576 |
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
Credit to equity for equity-settled share-based payments |
9 |
- |
- |
- |
- |
1,161 |
1,161 |
|
Purchase of own shares |
|
- |
- |
- |
(598) |
- |
(598) |
|
Issue of shares |
|
- |
15 |
- |
22 |
- |
37 |
|
Dividends |
19 |
- |
- |
- |
- |
(3,903) |
(3,903) |
|
Balance at 30 April 2025 |
|
171 |
75,277 |
(3,506) |
(576) |
33,167 |
104,533 |
Consolidated Statement of Cash Flows
For the year ended 30 April 2025
|
|
Note |
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Operating activities |
|
|
|
|
Cash generated from operations |
37 |
39,011 |
36,254 |
|
Non-underlying operating costs paid |
13 |
(5,366) |
(4,246) |
|
Tax paid |
|
(5,820) |
(5,432) |
|
Contingent acquisition payments |
|
(2,571) |
(3,745) |
|
Net cash from operating activities |
|
25,254 |
22,831 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of subsidiaries (net of cash acquired) |
21 |
(24,972) |
(1,888) |
|
Other investments and loans made |
|
|
(2,500) |
|
Other loan repayments |
|
500 |
- |
|
Loan interest received |
|
234 |
- |
|
Investment in joint ventures |
22 |
- |
(50) |
|
Purchase of intangible fixed assets |
20 |
(83) |
(40) |
|
Purchase of property, plant and equipment |
23 |
(11,753) |
(8,165) |
|
Proceeds from lease receivables |
26 |
458 |
405 |
|
Disposal of asset held for sale |
22 |
141 |
- |
|
Payment of deferred consideration |
|
(2,616) |
(2,417) |
|
Net cash used in investing activities |
|
(38,091) |
(14,655) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds of borrowings |
|
52,150 |
23,200 |
|
Repayment of borrowings |
|
(22,550) |
(16,325) |
|
Repayment of debt acquired with current year subsidiaries |
21 |
(172) |
(661) |
|
Repayment of debt acquired with prior year subsidiaries |
|
(473) |
(166) |
|
Repayment of lease liabilities |
|
(4,661) |
(5,113) |
|
Landlord capital contribution |
|
42 |
396 |
|
Associated lease costs |
|
(306) |
(72) |
|
Interest and other finance costs paid |
|
(6,213) |
(4,502) |
|
Purchase of own shares |
|
(598) |
- |
|
Dividends paid |
|
(3,903) |
(3,525) |
|
Net cash used in financing activities |
|
13,316 |
(6,768) |
|
Net increase in cash and cash equivalents |
|
479 |
1,408 |
|
Cash and cash equivalents at the beginning of the period |
|
5,453 |
4,045 |
|
Cash - continuing operations |
|
5,853 |
5,453 |
|
Cash - assets held for sale (note 27) |
|
79 |
- |
|
Total cash and cash equivalents at end of period |
|
5,932 |
5,453 |
Notes to the Consolidated Financial Statements
For the year ended 30 April 2025
1. General information
Knights Group Holdings plc ("the Company") is a public company limited by shares and is registered, domiciled and incorporated in England.
The Group consists of Knights Group Holdings plc, all of its subsidiaries and its share of joint ventures.
The principal activity and nature of operations of the Group is the provision of legal and professional services. The address of its registered office is:
The Brampton
Newcastle-under-Lyme
Staffordshire
ST5 0QW
2. Accounting policies
2.1 Basis of preparation
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards.
Applying these standards requires the directors to exercise judgement and use certain critical accounting estimates. The judgments and estimates that the directors deem significant in the preparation of these financial statements are explained in note 4.
The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Monetary amounts are presented in sterling, being the functional currency of the Group's subsidiaries, rounded to the nearest thousand except where otherwise indicated.
The principal accounting policies adopted are set out below. These policies have been consistently applied to all periods presented in the financial statements, unless otherwise stated.
2.2 Going concern
The accounts are prepared on a going concern basis as the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has a strong trading performance, generates strong operating cashflows and has recently renewed and increased its banking facilities from £70,000,000 to £100,000,000, available until 7 November 2027. The Group's forecasts show sufficient cash generation and headroom in banking facilities and covenants, by comparison to anticipated future requirements, to support the Directors' conclusions that the assumption of the going concern basis of accounting in preparing the financial statements is appropriate.
The Group continues to trade profitably and cash generation at an operating cashflow level has remained strong and in line with expectation. In order to satisfy the validity of the going concern assumption, a number of different trading scenarios including a reduction in revenues and costs have been modelled and reviewed. Some of these scenarios forecast a significantly more negative trading performance than is expected. In all of these scenarios the Group remained profitable and with significant headroom in its cash resources for the 12 months from the date of approval of the accounts.
2.3 Basis of consolidation
The consolidated financial statements incorporate the results of Knights Group Holdings plc, all of its subsidiaries and share of joint venture.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer which is the date of exchange of the sale and purchase agreement. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Transactions eliminated on consolidation
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.
Audit exemption of subsidiaries
The following subsidiaries are exempt from the requirements of the UK Companies Act 2006 relating to the audit of individual accounts by virtue of s479A of the Act.
|
Name |
Registered number |
|
Knights 1759 Limited |
10279177 |
|
K & S Trust Corporation Limited |
02885753 |
|
CLM Trust Corporation Limited |
11247326 |
|
Thursfields Legal Limited |
08829685 |
|
Thursfields (Legal Services) Limited |
02689313 |
|
Thursfields LLP |
OC355657 |
|
IBB Law LLP |
OC430367 |
|
IBB Law (UK) Limited |
02669392 |
The outstanding liabilities at 30 April 2025 of the above named subsidiaries have been guaranteed by the Company pursuant to s479A to s479C of the Act. In the opinion of the directors, the possibility of the guarantee being called upon is remote since the trade, assets and majority of liabilities of these subsidiaries were transferred to Knights Professional Services Limited before 30 April 2025.
2.4 Business combinations
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed.
The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. This discount rate used is the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Deferred consideration is classified as a financial liability, which is held at amortised cost. The unwinding of the discount is recognised in non-underlying costs. Contingent acquisition payments are contingent on an employee remaining in employment with the Group, and are accounted for separately from the business combination as remuneration as described in notes 13 and 21.
2.5 Revenue
The Group earns revenue from the provision of legal and professional services. Revenue for these services is recognised over time in the accounting period in which the services are rendered, as the Group has an enforceable right to payment for work performed to date under its client terms of engagement.
Fee arrangements for legal and professional services include fixed fee arrangements, unconditional fee-for-service arrangements ("time and materials"), and variable or contingent fee arrangements.
For fixed fee arrangements, revenue is recognised based on the stage of completion with reference to the actual services provided as a proportion of the total services expected to be provided under the contract. The stage of completion is measured using the input method, and completion is tracked on a contract-by-contract basis using the hours spent by professionals providing the services.
In fee-for-service contracts, revenue is recognised up to the amount of fees that the Group is entitled to bill for services performed to date based on contracted rates.
Under variable or contingent fee arrangements, fees may be earned only in the event of a successful outcome of a client's claim. Fees under these arrangements may be fixed or may be variable based on a specified percentage of damages awarded under a claim.
For variable or contingent fee arrangements management makes a detailed assessment of the amount of revenue expected to be received and the probability of success of each case. Variable consideration is recognised over the duration of the matter, only to the extent that it is highly probable that the amount recognised will not be subject to significant reversal when the matter is concluded, based on the expected amount recoverable at that point in time. In such circumstances, a level of judgement is required to determine the likelihood of success of a given matter, as well as the estimated amount of fees that will be recovered in respect of the matter. Where the likelihood of success of a contingent fee arrangement is less than highly probable, the value recognised in contract assets is further reduced to reflect this uncertainty.
Certain contingent fee arrangements are undertaken on a partially funded basis. In such arrangements, the funded portion of fees is not contingent on the successful outcome of the litigation and in these instances the revenue is recognised up to the amount of fees that the Group is entitled to bill for services performed to date based on contracted rates. The remaining consideration is variable and conditional on the successful resolution of the litigation. The variable consideration is recognised over the duration of the matter and included in revenue based on the expected amount recoverable only to the extent that it is highly probable that the amount recognised will not be subject to significant reversal when the uncertainty is resolved at that point in time.
The Group's contracts with clients each comprise of a single distinct performance obligation, being the provision of legal and professional services in relation to a particular matter, and the transaction price is therefore allocated to this single performance obligation.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in the Consolidated Statement of Comprehensive Income in the period in which the circumstances that give rise to the revision become known by management.
The Group has determined that no significant financing component exists in respect of the provision of legal and professional services because the period between when the Group transfers its services to a client and when the client pays for that service will generally be one year or less.
Consideration for services provided under contingent or variable fee arrangements may be paid after a longer period. In these cases, no significant financing component exists because the consideration promised by the client is variable subject to the occurrence or non-occurrence of a future event that is not substantially within the control of the client or the Group.
A trade receivable is recognised when a bill has been issued to the client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Unbilled revenue is recognised as contract assets. Costs incurred in fulfilling the future performance obligations of a contract are recognised as contract assets if the costs are expected to be recovered.
Contract liabilities are recognised in respect of consideration billed in advance of satisfying the performance obligation under the contract.
Revenue does not include disbursements. Recoverable expenses incurred on client matters that are expected to be recovered and are billed during the period are recognised in other income.
2.6 Interest received on client deposits
Interest recognised on client deposits held is recognised in the Consolidated Statement of Comprehensive Income as it accrues, based on the effective interest rate during the period. This forms part of other operating income as this is driven by the ongoing operations of the business.
2.7 Taxation
The tax expense represents the sum of the current tax expense and the deferred tax expense. Current tax assets are recognised when the tax paid exceeds the tax payable. Current tax is based on taxable profit for the year. Current tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is recognised for temporary differences, calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates that have been enacted or substantively enacted by the reporting date except for;
· When the deferred tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
· When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised only to the extent that it is probable that they will be recovered by the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination and the amounts that can be deducted or assessed for tax. The deferred tax recognised is adjusted against goodwill.
Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset if, and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
2.8 Intangible assets - Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated impairment losses. Goodwill is tested annually by the directors for evidence of impairment.
2.9 Intangible assets - Other than goodwill
Intangible assets purchased, other than in a business combination, are recognised when future economic benefits are probable and the cost or value of the asset can be measured reliably.
Intangible assets arising on a business combination, such as customer relationships, are initially recognised at estimated fair value, except where the asset does not arise from legal or contractual rights, and there is no history or evidence of exchange transactions for the same or similar assets and estimating the assets fair value would depend on immeasurable variables. The fair value represents the directors' best estimate of future economic benefit to be derived from these assets discounted at an appropriate rate.
Other intangible assets are initially recognised at cost (which for intangible assets acquired in a business combination is the fair value at acquisition date) and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Customer relationships that are acquired by the Group as part of a business combination are stated at cost less accumulated amortisation and impairment losses (see accounting policy 'Impairment of non-financial assets'). Cost reflects management's judgement of the fair value of the individual intangible asset calculated by reference to the net present value of future benefits accruing to the Group from the utilisation of the asset, discounted at an appropriate discount rate
Intangible assets are amortised to the Consolidated Statement of Comprehensive Income on a straight-line basis over their estimated useful lives, as follows:
|
Purchased computer software |
- |
4 years |
|
Customer relationships |
- |
3-25 years |
|
Brand |
- |
100 years |
Purchased computer software is amortised over a period of 4 years, being the minimum period expected to benefit from the asset.
Customer relationships are amortised over a period of 3-25 years being the average length of relationship with key clients for acquired entities.
Brand value is amortised over a period of 100 years based on the directors' assessment of the future life of the brand. This is supported by a trading history dating back to 1759. Brand value relates to the 'Knights' brand only. Other acquired brands are not recognised as an asset as the impact of such recognition would not be material.
2.10 Property, plant and equipment
Property, plant and equipment are stated at cost net of depreciation and any provision for impairment.
Depreciation is provided on property, plant and equipment at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows:
Freehold property - 2% on cost
Expenditure on short leasehold property - 10% on cost
Leasehold property - 1% on cost
Office equipment - 25% on cost
Furniture and fittings - 10% on cost
Motor vehicles - 25% on cost
Right-of-use assets - useful life of the lease (between 2 and 25 years)
Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life.
2.11 Investment in joint ventures
Entities in which the Group has a long-term interest and share control under a contractual arrangement are classified as joint ventures. Joint ventures are accounted for using the equity method. Where necessary, adjustments are made to bring the accounting policies of joint ventures into line with those used by the Group.
2.12 Impairment of non-financial assets
An assessment is made at each reporting date of whether there are indications that non-financial assets may be impaired or that an impairment loss previously recognised has fully or partially reversed. If such indications exist, the Group estimates the recoverable amount of the asset or, for goodwill, the recoverable amount of the cash-generating unit.
Shortfalls between the carrying value of non-financial assets and their recoverable amounts, being the higher of the fair value less costs to sell and value in use, are recognised as impairment losses. All impairment losses are recognised in the Consolidated Statement of Comprehensive Income.
Recognised impairment losses are reversed (other than for goodwill) if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in the Consolidated Statement of Comprehensive Income. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset's revised carrying amount (less any residual value) over its remaining useful life.
2.13 Leases
Group as lessee
The Group leases offices, equipment and vehicles. Rental contracts are for periods of between 2 and 25 years. Lease terms are negotiated on a lease-by-lease basis and contain a variety of terms and conditions.
The Group assesses whether a contract is, or contains, a lease at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short term leases (defined as leases with a lease term of 12 months or less) or leases of low value assets (being those assets with a value less than £4,000). For short term and low value leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
· fixed payments (including in-substance fixed payments), less any lease incentives receivable;
· variable lease payments that are based on an index or a rate;
· amounts expected to be payable by the Group under residual value guarantees;
· the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
· payments of penalties for terminating the lease, if the lease term assumed reflects the group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group's incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Underlying lease payments of both principal and interest are included in financing activities in the cash flow. Onerous lease payments of both principal and interest are included in non-underlying operating activities in the Statement of Cash Flows.
The lease liability is presented as a separate line in the Consolidated Statement of Financial Position.
Right-of-use assets are recognised at commencement of the lease and initially measured at the amount of the present value of the lease liability, plus any incremental costs of obtaining the lease and any lease payments made at or before the leased asset is available for use by the Group.
After initial recognition, the lease liability is reduced for payments made and increased to reflect interest on the lease liability (using the effective interest method). The related right-of-use asset is depreciated over the term of the lease or, if shorter, the useful economic life of the leased asset. The lease term shall include the period of an extension option where it is reasonably certain that the option will be exercised. Interest on the lease liability is recognised in the Consolidated Statement of Comprehensive Income.
An estimate of the costs to be incurred in restoring the leased asset to the condition required under the terms and conditions of the lease is recognised as part of the cost of the right-of-use asset when the Group incurs the obligation for these costs. The costs are incurred at the start of the lease or over the lease term. The provision is measured at the present value of the best estimate of the expenditure required to settle the obligation.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever:
· the lease term has changed or there is a significant change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
· the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used);
· a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
Group as lessor
The Group enters into lease agreements as a lessor with respect to some of its properties.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for a major part of the economic life of the asset.
Finance lease receivables are initially measured on a present value basis. This includes the net present value of the following lease payments receivable:
· fixed payments receivable (including in-substance fixed payments), less any lease incentives payable;
· variable lease payments receivable that are based on an index or a rate;
· amounts expected to be receivable by the Group under residual value guarantees; and
· payments received on penalties for terminating the lease, if the lease term assumed reflects the group exercising that option.
The lease payments receivable are discounted using the interest rate implicit in the head lease.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
Underlying lease payments received of both principal and interest are included in investing activities in the cash flow.
The finance lease receivable is presented as a separate line in the Consolidated Statement of Financial Position.
After initial recognition, the lease receivable is reduced for payments received and increased to reflect interest on the lease receivable (using the effective interest method). The lease term shall include the period of an extension option where it is reasonably certain that the option will be exercised. Interest on the lease receivable is recognised in the Consolidated Statement of Comprehensive Income.
The Group remeasures the lease receivable (and makes a corresponding adjustment to the Consolidated Statement of Comprehensive Income) whenever:
· the lease term has changed or there is a significant change in the assessment of exercise of a purchase option, in which case the lease receivable is remeasured by discounting the revised lease payments receivable using a revised discount rate;
· the lease payments receivable change due to changes in an index or rate or a change in expected receivable under a guaranteed residual value, in which cases the lease receivable is remeasured by discounting the revised lease payments receivable using the initial discount rate (unless the lease payments receivable change is due to a change in a floating interest rate, in which case a revised discount rate is used);
· a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease receivable is remeasured by discounting the revised lease payments receivable using a revised discount rate.
2.14 Retirement benefits
2.14a Defined contribution scheme
The Group operates a defined contribution scheme. The amount charged to the Consolidated Statement of Comprehensive Income in respect of pension costs is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accrued expenses or prepayments and other receivables.
2.14b Defined benefit pension scheme
For defined benefit schemes the amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments. They are included as part of staff costs. The interest cost and the expected return on assets are shown as a net amount in other finance costs or finance income.
Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Group, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each reporting date.
Defined benefit assets are not recognised in the Consolidated Statement of Financial Position, on the basis that they are not deemed to be material.
For the 'With Profit Section' contributions are recognised in the Consolidated Statement of Comprehensive Income in the period to which they relate as there is insufficient information available to use defined benefit accounting. A liability will be recognised based on the agreed share of the Group in the scheme. No liability has been recognised in the current or prior period on the basis that they are not deemed to be material.
2.15 Share-based payments
The cost of providing share-based payments to employees is charged to the Consolidated Statement of Comprehensive Income over the vesting period of the awards. The cost is based on the fair value of awards at the date of grant of the award using an appropriate valuation model. The amount recognised as an expense will be adjusted to reflect differences between the expected and actual vesting levels. Further details of the schemes are included in note 9.
2.16 Financial instruments
Financial instruments are recognised on the date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value.
Financial assets
Contract assets and trade and other receivables
Contract assets and trade and other receivables are initially measured at fair value. These assets are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses ('ECL') on contract assets and trade and other receivables. The expected credit losses on trade receivables includes specific provisions against known receivables and an estimate using a provision matrix by reference to past experience, adjusted for forward looking considerations, and an analysis of the debtor's current financial position on the remaining balance. The expected credit losses on contract assets and other receivables is assessed based on expected credit loss experienced on these types of assets adjusted for known foreseeable estimated losses.
Financial liabilities and equity
Financial instruments are classified as liabilities and equity instruments according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Trade and other payables
Trade and other payables due within one year are initially measured at fair value and subsequently measured at amortised cost, being the transaction price less any amounts settled.
Deferred consideration
Deferred consideration is initially recognised at the fair value of the amounts payable and subsequently at amortised cost of the agreed payments in accordance with the agreement. Any interest payable on the balance is reflected in the value of the liability and charged monthly to the Statement of Comprehensive Income as it arises.
Borrowings
Borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowings. Borrowings are subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Derecognition of financial assets and liabilities
A financial asset is derecognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party. A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
2.17 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the effect of the time value of money is material, provisions are discounted using rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Onerous service charge provisions are recognised when the unavoidable costs of meeting service charge obligations exceed the expected economic benefits to be derived from the leased properties. The provision represents the present value of the expected future service charge payments for the remaining lease term. Any onerous lease payments for rent are recognised within lease liabilities.
In common with comparable practices, the Group is involved in a number of disputes in the ordinary course of business which may give rise to claims. Professional indemnity insurance cover is maintained in respect of professional negligence claims. Premiums are expensed as they fall due with prepayments being recognised accordingly. A provision is made in the financial statements for all claims where costs are likely to be incurred. The provision represents management's best estimate of the cost of defending and concluding claims and any excesses that may become payable. No separate disclosure is made for the cost of claims covered by insurance as to do so could seriously prejudice the position of the Group.
Dilapidation provisions are recognised where the Group has an obligation under lease agreements to return leased properties to their original condition at the end of the lease term. An estimate of the costs to be incurred in restoring the leased asset to the condition required under the terms and conditions of the lease is recognised as part of the cost of the right-of-use asset when the Group incurs the obligation for these costs. The costs are incurred at the start of the lease or over the lease term. The provision is measured at the present value of the best estimate of the expenditure required to settle the obligation.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
2.18 Treasury Shares
The Group operates an Employee Benefit Trust ("EBT") under which ordinary shares are repurchased from the market and are subsequently issued to satisfy employee share options which are exercised. These are treated as treasury shares under IAS 32 and are added to the Treasury Shares Reserve.
Treasury shares are deducted from equity in accordance with IAS 32 Financial Instruments: Presentation. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Any dividends on treasury shares are waived.
3. Accounting developments
New and amended IFRSs that are effective in this period for the first time:
The Group has applied the following amendments for the first time in these financial statements:
|
New and amended IFRSs |
|
Amendments to IAS 7: Statement of Cashflows |
|
Amendments to IAS 1: Presentation of Financial Statements |
|
Amendments to IFRS 16: Leases |
The application of these new amendments did not have a material impact on the financial statements.
New and amended IFRSs that are effective for the future
At the date of these financial statements, there are new standards and amendments to IFRSs in issue but not yet effective and have therefore not been applied as set out below:
|
New and amended IFRSs |
Effective date |
|
IFRS 18 Presentation and Disclosure in Financial Statements |
1 January 2027 |
|
IFRS 19 - Subsidiaries without Public Accountability - Disclosures |
1 January 2027 |
|
Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments |
1 January 2026 |
The full impact of IFRS 18 on the financial statements is in the process of being reviewed, however the directors do not expect that the adoption of the standard will have a material impact on the financial statements of the Group in future periods.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Amounts recoverable on contracts - contingent fee arrangements
A level of judgement is required to determine the likelihood of success of a given matter for contingent fee arrangements. This is determined on a contract-by-contract basis after considering the relevant facts and circumstances surrounding each matter. The valuation exercise is conducted by experienced professionals with a detailed understanding of the individual matters. The carrying value of contingent fee arrangements at 30 April 2025 was £12,836,000 (2024: £13,070,000).
Business combinations
Management make judgements regarding the date of control of an acquisition in accordance with IFRS 10. The judgement considers the individual legal agreements on each transaction and the date at which the Group starts to exercise control over the activities of the subsidiary, usually the date of exchange of contracts. Financial performance of the acquisitions is included in the consolidated Group from the deemed date of control.
Alternative performance measures (APMs)
The Group presents various APMs to assist the user in understanding the underlying performance of the Group. The selection of these APMs requires the exercise of judgement as to the key performance indicators used.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty in the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
IFRS 16
The Group makes estimates of the cost of restoring leased assets to their original condition when required to do so under the terms and conditions of the lease. Those estimates are based on the current condition of the leased assets and past experience of restoration costs. As at 30 April 2025 the Group had total provisions of £6,726,000 (2024: £4,761,000) (see note 35).
Amounts recoverable on contract assets- recoverable amounts
The valuation of amounts recoverable on contract assets ('AROC') involves the use of estimates of the likely recovery rate which will be made on the gross value of chargeable time recorded to each matter.
This percentage represents management's best estimate of future value following a line by line review of the matters by professionals. The estimation process takes into account the progress of the case at the reporting date, the estimated eventual fee payable by the client and the amount of time which will be incurred in bringing the matter to a successful conclusion. The amount recognised in AROC at the year end was £50,998,000 (2024: £40,191,000), a 3% change in the estimated recovery of all matters would impact the profit for the period by approximately £1,895,000 (2024: £1,469,000).
Accounting for business combinations and valuation of acquired intangibles
Business combinations are accounted for at fair value. The valuation of goodwill and acquired intangibles is calculated separately on each individual acquisition. In attributing value to intangible assets arising on acquisition, management has made certain assumptions in relation to the expected growth rates, length of key customer relationships and the appropriate weighted average cost of capital ('WACC') and internal rate of return ('IRR'). Profitability at an EBITDA margin level is also assumed, but is considered reasonably predictable.
The value attributable to the intangible assets acquired on acquisitions also impacts the deferred tax provision relating to these items.
The total carrying value of acquired intangibles (excluding brands) is £27,960,000 (2024: £20,027,000). In order to assess the impact of the key assumptions on the values disclosed in the Financial Statements the Directors have applied the following sensitivities to the acquisitions in the current year:
|
Key assumption |
Rate applied in the financial statements |
Sensitivity tested |
Annual profit impact |
Value of intangible assets |
|
Long term growth rate |
2% |
0% |
47 |
(60) |
|
WACC and IRR |
10.5 - 11.6% (1) |
Increase by 5% |
203 |
(369) |
|
Length of customer relationships |
5.1 - 8.0 years |
Increase of 5 years |
114 |
1,640 |
(1) Each acquisition has been reviewed and, dependent upon the structure of the acquisition, an appropriate WACC or IRR rate has been applied. These sensitivities have been calculated by adjusting the adopted rates as noted above.
Growth rates are estimated based on the current conditions at the date of each acquisition with reference to independent surveys of future growth rates in the legal profession in real, inflation adjusted terms.
The length of customer relationships is estimated by considering the length of time the acquiree has had its significant client relationships up to the date of acquisition and historic customer attrition rates as appropriate.
The Directors consider the resulting valuations used give a reasonable approximation as to the value of the intangibles acquired and that any reasonably possible change in any one of the estimations in isolation would not have a material impact on the financial statements.
Intangible Assets - carrying amount of goodwill - impairment review
The Directors undertake an annual impairment review of goodwill to assess whether the carrying value of £72,893,000 is still supported by using a discounted cash flow model to derive the value in use of the cash generating unit ('CGU'). Cash flow forecasts are derived from the most recent financial budgets approved by management for the next three years and extrapolated using a terminal value calculation.
The key assumptions for the value in use calculations are those regarding the discount rates and growth rates for the Group's revenues from legal and professional services and the EBITDA margin. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU.
Revenue growth over the three years of the forecast period reflects, for FY26, the current run rate of revenue from the Group's existing business and a full year of revenue from acquisitions made during the year ended 30 April 2025, with an element of organic growth in FY27 and FY28. The long-term growth rate of 2% (2024: 2%) is based on UK economic growth forecasts for the legal services market.
The Group has conducted a sensitivity analysis on the impairment test of the CGU value in use. Management considers there is no reasonably plausible scenario under which goodwill would be impaired.
5. Revenue
All revenue is derived from contracts with clients and is recognised over time. As explained further in note 6, the Group's legal and professional services business operates as a single business unit so there are no relevant categories into which revenue can be disaggregated.
The transaction price allocated to unsatisfied performance obligations of contracts at 30 April 2025 is not required to be disclosed because it is comprised of contracts that are expected to have a duration of one year or less.
Management information does not distinguish between contingent and non-contingent revenue as contingent fees are not separately identifiable from other fees.
6. Segmental reporting
The Board of Directors, as the chief operating decision-making body, reviews financial information for and makes decisions about the Group's overall legal and professional services business and has identified a single operating segment, that of legal and professional services operating entirely in the UK.
The legal and professional services business operates through a number of different service lines and in different locations; however, management effort is consistently directed to the firm operating as a single segment. No segmental reporting disclosure is therefore provided as all revenue is derived from this single segment.
7. Other operating income
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Other income |
811 |
758 |
|
Bank interest on client monies |
8,838 |
9,681 |
|
|
9,649 |
10,439 |
8. Staff costs
The average monthly number of employees (including executive directors) of the Group was:
|
|
Year ended 30 April 2025 Number |
Year ended 30 April 2024 Number |
|
Fee earners |
1,079 |
1,131 |
|
Other employees |
275 |
298 |
|
|
1,354 |
1,429 |
Their aggregate remuneration comprised:
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Wages and salaries |
84,380 |
80,456 |
|
Social security costs |
9,452 |
9,053 |
|
Other pension costs |
3,829 |
2,615 |
|
Share-based payment charge |
1,200 |
1,131 |
|
Other employment costs |
1,018 |
1,097 |
|
Aggregate remuneration of employees |
99,879 |
94,352 |
|
Redundancy costs and share-based payment charges analysed as non-underlying costs |
(2,272) |
(1,345) |
|
Underlying staff costs in Consolidated Statement of Comprehensive Income |
97,607 |
93,007 |
Directors' remuneration
Companies Act disclosures
The total amounts for directors' remuneration in accordance with Schedule 5 to the Accounting Regulations were as follows:
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Salaries, fees, bonuses and benefits in kind |
1,000 |
749 |
|
Money purchase pension contributions |
14 |
7 |
|
|
1,014 |
756 |
The number of directors to whom benefits are accruing under money purchase pension schemes is 1 (2024: 1).
The remuneration of the highest paid director was:
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Salaries, fees, bonuses, benefits in kind and gains on exercise of options |
380 |
315 |
|
Money purchase pension contributions |
14 |
- |
|
|
394 |
315 |
9. Share-based payments
The Group issues equity-settled share-based payments to its employees. The Group recognised total expenses of £1,200,000 (2024: £1,131,000) relating to equity-settled share-based payment transactions in the year. £1,195,000 (2024: £1,121,000) is recognised within staff costs, and £5,000 (2024: £10,000) is classified as non-underlying costs.
Any charges relating to schemes introduced as one-off schemes as part of the listing on AIM in 2018 are included in non-underlying costs because in the directors view these schemes were as a reward to employees for their past performance prior to the IPO and on acquisitions. All charges relating to other recurring LTIP or SAYE schemes are included as a normal operating expense.
The following schemes were in place during the period:
Omnibus Plan
The Omnibus Plan is a discretionary share plan, which is administered, and the grant of awards is supervised by, the Remuneration Committee.
Two forms of award are available under the Omnibus Plan, as considered appropriate by the Remuneration Committee, as follows:
a) "Restricted Stock Awards": Awards granted in the form of nil or nominal cost share options, subject to time-based vesting requirements and continued employment within the Group. No performance targets will apply to Restricted Stock Awards.
b) "Performance Share Awards": Awards granted in the form of nil or nominal cost share options, whereby vesting is subject to satisfaction of performance conditions and continued employment within the Group. The performance condition is in relation to meeting target underlying EPS values.
|
|
Restricted stock awards |
Performance share awards |
||
|
|
Number |
Weighted average exercise price |
Number |
Weighted average exercise price |
|
Outstanding at 1 May 2023 |
3,170,654 |
0.2 |
367,064 |
0.2 |
|
Granted during the period |
433,332 |
0.2 |
- |
0.2 |
|
Dividend equivalents awarded |
144,200 |
0.2 |
9,471 |
0.2 |
|
Forfeited during the period |
(105,912) |
0.2 |
(138,397) |
0.2 |
|
Exercised during the period |
(100,184) |
0.2 |
- |
- |
|
Outstanding at 30 April 2024 |
3,542,090 |
0.2 |
238,138 |
0.2 |
|
Exercisable at 30 April 2024 |
992,586 |
0.2 |
- |
- |
|
Granted during the period |
1,050,000 |
0.2 |
3,120,000 |
0.2 |
|
Dividend equivalents awarded |
132,516 |
0.2 |
6,316 |
0.2 |
|
Forfeited during the period |
(258,154) |
0.2 |
(55,015) |
0.2 |
|
Exercised during the period |
(72,927) |
0.2 |
- |
0.2 |
|
Outstanding at 30 April 2025 |
4,393,525 |
0.2 |
3,309,439 |
0.2 |
|
Exercisable at 30 April 2025 |
1,971,598 |
0.2 |
- |
- |
The options outstanding at 30 April 2025 had a weighted average exercise price of 0.2p and a weighted average remaining contractual life of 2.5 years. The average share price for options exercised during the year was 131.1p.
During the year 1,050,000 options were granted as restricted stock awards and 3,120,000 options were granted as performance stock awards. The maximum term of any award is four years.
The aggregate of the estimated fair values of the options granted during the year was £4,707,960. The model used is based on intrinsic values and the inputs are as follows:
|
Date Granted |
Number of Shares |
Fair Value £ |
Share Price (p) |
Exercise Price (p) |
Expected Life |
Type of award |
|
26 July 2024 |
270,000 |
347,760 |
129.0 |
0.2 |
3.0 years |
Restricted stock |
|
29 October 2024 |
780,000 |
872,040 |
112.0 |
0.2 |
3.8 years |
Restricted stock |
|
29 October 2024 |
3,120,000 |
3,488,160 |
112.0 |
0.2 |
3.8 years |
Performance share |
Company Share Option Plan ('CSOP')
The CSOP is separate from the Knights Omnibus Plan. Subject to Rule 2 of the CSOP, CSOP Options granted under the CSOP have the same terms as Share Options as defined in and granted under the Knights Omnibus Plan, but as modified by the CSOP.
As approved by HMRC these are awards granted in the form of share options at an exercise price of £1.238 representing the average of the closing prices quoted for Shares in the Financial Times in respect of the five dealing days immediately preceding the Grant Date. The awards are subject to time-based vesting requirements and continued employment within the Group. No performance targets will apply to the CSOP's.
|
|
Number |
Weighted average exercise price |
|
Outstanding at 1 May 2024 |
- |
- |
|
Granted during the period |
1,017,765 |
123.8 |
|
Forfeited during the period |
(48,465) |
123.8 |
|
Outstanding at 30 April 2025 |
969,300 |
123.8 |
The options outstanding at 30 April 2025 had a weighted average exercise price of 123.8p and a weighted average remaining contractual life of 2.5 years.
The aggregate of the estimated fair values of the options granted during the year was £324,428. The inputs into the Black-Scholes model are as follows:
|
Exercise price |
123.8p |
|
Expected volatility |
55.2% |
|
Expected life |
3.0 years |
|
Risk-free rate |
4.1% |
|
Expected dividend yield |
3.9% |
Share Incentive Plan ('SIP')
The SIP is an "all employee" scheme under which every eligible employee within the Group was invited to participate. The original SIP scheme was launched in September 2019, eligible employees could apply to invest up to £1,800 from pre-tax income in partnership shares; matching shares were awarded on the basis of two free matching shares for each partnership share purchased.
In January 2024, the Group launched a new 'evergreen' SIP scheme which allows eligible employees to purchase shares each month with the maximum investment per employee per year being £1,800. Matching shares are awarded on the basis of one free matching share for every two partnership shares purchased.
Under both schemes, matching shares are forfeited if the employee leaves within three years of the grant date.
|
|
Partnership Shares |
Matching Shares |
Dividend Shares Number |
|
|
|
|
|
|
Outstanding at 1 May 2023 |
118,196 |
236,393 |
- |
|
Granted during the period |
48,856 |
24,418 |
16,188 |
|
Withdrawn during the period |
(37,219) |
- |
- |
|
Reallocated during the period |
(6,766) |
(12,733) |
19,499 |
|
Forfeited during the period |
- |
(70,351) |
(4,784) |
|
Outstanding at 30 April 2024 |
123,067 |
177,727 |
30,903 |
|
Unrestricted at 30 April 2024 |
74,285 |
153,346 |
30,903 |
|
Granted during the period |
76,141 |
38,053 |
12,216 |
|
Withdrawn during the period |
(22,292) |
- |
- |
|
Reallocated during the period |
- |
- |
- |
|
Forfeited during the period |
- |
(30,735) |
(3,150) |
|
Outstanding at 30 April 2025 |
176,916 |
185,045 |
39,969 |
|
Unrestricted at 30 April 2025 |
61,658 |
127,440 |
39,969 |
Sharesave Scheme ('SAYE')
This is an HMRC approved scheme and is open to any person that was an employee or officer of the Group at the launch date of each scheme. Under the scheme, members save a fixed amount each month for three years. Subject to remaining in employment by the Group, at the end of the three-year period they are entitled to use these savings to buy shares in the Company at 80% of the market value at launch date.
The first scheme was launched in November 2018 and further new SAYE schemes were launched in February 2020 and March 2022.
|
|
SAYE options |
|
|
|
Number |
Weighted average exercise price |
|
|
|
|
|
Outstanding at 1 May 2023 |
870,168 |
306 |
|
Forfeited during the period |
(569,621) |
310 |
|
Outstanding at 30 April 2024 |
300,547 |
298 |
|
Exercisable at 30 April 2024 |
7,977 |
361 |
|
Forfeited during the period |
(135,308) |
300 |
|
Outstanding at 30 April 2025 |
165,239 |
296 |
|
Exercisable at 30 April 2025 |
165,239 |
296 |
The options outstanding at 30 April 2025 had a weighted average exercise price of 296p.
March 2022 Scheme
The aggregate of the estimated fair values of the options granted in March 2022 is £110,000. The inputs into the Black-Scholes model are as follows:
|
Exercise price |
296p |
|
Weighted average share price |
148p |
|
Expected volatility |
53.7% |
|
Expected life |
3.1 years |
|
Risk-free rate |
5.9% |
|
Expected dividend yield |
3.0% |
The March 2022 scheme matured on 30 April 2025, the number of share options exercised in respect of this scheme as at 30 April 2025 is nil. There are 165,239 share options which remain exercisable.
10. Retirement benefit schemes
The Group operates a defined contribution pension scheme for employees. The total cost charged to income of £3,829,000 (2024: £2,615,000) represents contributions payable to the scheme by the Group. As at 30 April 2025, total contributions of £759,000 (2024: £551,000) due in respect of the reporting period had not been paid over to the schemes.
The defined benefit impact is discussed in note 41. There were no charges against income in the year ended 30 April 2025.
11. Depreciation and amortisation charges
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Depreciation |
3,333 |
2,656 |
|
Depreciation on right-of-use assets |
5,223 |
5,607 |
|
Amortisation on computer software |
92 |
103 |
|
Loss on disposal of property, plant and equipment |
192 |
144 |
|
Underlying depreciation and amortisation charges in Consolidated Statement of Comprehensive Income |
8,840 |
8,510 |
|
Amortisation on acquired intangibles |
4,033 |
3,580 |
|
|
12,873 |
12,090 |
Amortisation on acquired intangibles has been separately identified within overall depreciation and amortisation charges as it is deemed to be a non-underlying cost, on the basis that it relates to acquisitions.
12. Other operating charges
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Establishment costs |
8,301 |
7,775 |
|
Short term and low value lease costs |
62 |
247 |
|
Other overhead expenses |
21,476 |
20,196 |
|
|
29,839 |
28,218 |
13. Non-underlying costs
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Redundancy and reorganisation staff costs |
2,266 |
1,335 |
|
Share-based payment charges |
5 |
10 |
|
Contingent acquisition payments treated as remuneration |
3,752 |
2,824 |
|
Impairment of right-of-use assets |
2,078 |
153 |
|
Impairment of acquired software |
352 |
- |
|
Recognition of onerous service charge |
750 |
- |
|
(Profit) on disposal of right-of-use assets |
(340) |
(125) |
|
Loss on disposal of property, plant and equipment |
315 |
930 |
|
Transaction costs |
2,277 |
1,503 |
|
Non-underlying operating costs |
11,455 |
6,630 |
|
Non-underlying finance costs |
246 |
281 |
|
|
11,701 |
6,911 |
Non-underlying costs cash movement
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Non-underlying costs |
11,701 |
6,911 |
|
Adjustments for: |
|
|
|
Contingent acquisition payments shown separately |
(3,752) |
(2,824) |
|
Non-cash movements: |
|
|
|
Share-based payment charge |
(5) |
(10) |
|
Impairment of right-of-use assets |
(2,078) |
(153) |
|
Impairment of acquired software |
(352) |
- |
|
Recognition of onerous service charge |
(750) |
- |
|
Profit on disposal of right-of-use assets |
468 |
449 |
|
(Loss) on disposal of property, plant and equipment |
(315) |
(930) |
|
Transaction costs |
(107) |
(443) |
|
Non-underlying finance costs |
(246) |
(281) |
|
Additional cash movements: |
|
|
|
Rental payments on onerous leases |
435 |
605 |
|
Service charge payments on onerous leases |
128 |
104 |
|
Dilapidation payments |
239 |
818 |
|
|
5,366 |
4,246 |
Non-underlying costs relate to redundancy costs to streamline the support function of the Group following acquisitions or strategic reorganisations, transaction costs in respect of acquisitions, onerous lease costs in respect of acquisitions, this is where properties have become vacant as employees have been moved into right-sized offices in the same region. Also disposals of acquired assets and share-based payment charges relating to one off share schemes offered to employees as part of the IPO and on acquisitions.
Contingent acquisition payments are included in non-underlying costs as it represents payments which are contingent on the continued employment of those individuals with the Group, agreed under the terms of the sale and purchase agreements with vendors of certain businesses acquired. The payments extend over periods of one to three years and are designed to preserve the value of goodwill and customer relationships acquired in the business combinations. IFRS requires such arrangements to be treated as remuneration and charged to the Consolidated Statement of Comprehensive Income. The individuals also receive market rate salaries for their work, in line with other similar members of staff in the Group. The contingent earnout payments are significantly in excess of these market salaries and would distort the Group's results if not separately identified.
14. Finance costs
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Interest on borrowings |
4,133 |
3,402 |
|
Interest on leases |
2,312 |
1,537 |
|
|
6,445 |
4,939 |
15. Finance income
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Loan interest receivable |
239 |
23 |
|
Lease interest receivable |
63 |
66 |
|
|
302 |
89 |
16. Auditor's remuneration
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Fees payable to the parent company's auditor and their associates for the audit of the parent company's annual accounts |
56 |
50 |
|
Fees payable to the auditor and their associates for other services to the Group: |
|
|
|
- The audit of the Company's subsidiaries |
177 |
170 |
|
Total audit fees |
233 |
220 |
|
|
|
|
|
- Audit-related assurance services |
25 |
25 |
|
Total non-audit fees |
25 |
25 |
|
|
|
|
17. Taxation
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Corporation tax: |
|
|
|
Current year |
4,626 |
4,991 |
|
Adjustments in respect of prior years |
224 |
218 |
|
|
4,850 |
5,209 |
|
Deferred tax: |
|
|
|
Origination and reversal of temporary differences |
(157) |
(225) |
|
|
|
|
|
Tax expense for the year |
4,693 |
4,984 |
The charge for the period can be reconciled to the Consolidated Statement of Comprehensive Income as follows:
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Profit before tax |
12,269 |
14,831 |
|
Tax at the UK corporation tax rate of 25% (2024: 25%) |
3,067 |
3,708 |
|
Expenses that are not deductible in determining taxable profit |
1,382 |
1,058 |
|
Partnership tax paid on acquired subsidiaries |
20 |
- |
|
Adjustment in respect of prior years |
224 |
218 |
|
Tax expense for the year |
4,693 |
4,984 |
|
|
|
|
|
Consisting of: |
|
|
|
Taxation - underlying |
7,448 |
6,598 |
|
Tax impact of non-underlying costs |
(2,755) |
(1,614) |
The impact of non-underlying costs on the effective rate of tax is set out below:
|
|
Year ended 30 April 2025 |
Year ended 30 April 2024 |
||||
|
|
Total
£'000 |
Underlying |
Non-Underlying £'000 |
Total
£'000 |
Underlying |
Non-Underlying £'000 |
|
Profit before tax |
12,269 |
28,003 |
(15,734) |
14,831 |
25,322 |
(10,491) |
|
Tax expense |
4,693 |
7,448 |
(2,755) |
4,984 |
6,598 |
(1,614) |
|
Effective rate of tax |
38% |
27% |
18% |
34% |
26% |
15% |
|
|
|
|
|
|
|
|
18. Earnings per share
Basic and diluted earnings per share have been calculated using profit after tax and the weighted average number of ordinary shares in issue during the period.
|
|
Year ended 30 April 2025 Number |
Year ended 30 April 2024 Number |
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
85,950,758 |
85,840,067 |
|
Weighted average shares held in EBT |
(137,332) |
- |
|
|
85,813,426 |
85,840,067 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
Share options |
4,027,011 |
2,778,654 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
89,840,437 |
88,618,721 |
|
|
£'000 |
£'000 |
|
Profit after tax |
7,576 |
9,847 |
|
Earnings per share |
Pence |
Pence |
|
Basic earnings per share |
8.83 |
11.47 |
|
Diluted earnings per share |
8.43 |
11.11 |
Underlying earnings per share is calculated as an alternative performance measure in note 39.
19. Dividends
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Amounts recognised as distributions to equity holders in the year: |
|
|
|
Final dividend for the year ended 30 April 2024 of 2.79p per share (2023: 2.50p) |
2,396 |
2,145 |
|
Interim dividend for the year ended 30 April 2025 of 1.76p per share (2024: 1.61p per share) |
1,507 |
1,380 |
|
|
3,903 |
3,525 |
For the year ended 30 April 2025 the Board have proposed a final dividend of 3.05p per share (2024: 2.79p per share). The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend is payable to all shareholders on the register of members on 10 October 2025. The payment of this dividend will not have any tax consequences for the Group.
20. Intangible assets and goodwill
|
|
Goodwill £'000 |
Brand £'000 |
Customer relationships £'000 |
Purchased computer software £'000 |
Total £'000 |
|
Cost |
|
|
|
|
|
|
As at 1 May 2023 |
59,661 |
5,401 |
35,134 |
495 |
100,691 |
|
Acquisitions of subsidiaries |
2,049 |
- |
395 |
- |
2,444 |
|
Adjustments |
78 |
- |
- |
- |
78 |
|
Additions |
- |
- |
- |
40 |
40 |
|
Disposals |
- |
- |
(1,097) |
- |
(1,097) |
|
As at 30 April 2024 |
61,788 |
5,401 |
34,432 |
535 |
102,156 |
|
Acquisitions of subsidiaries |
11,261 |
- |
11,912 |
352 |
23,525 |
|
Adjustments |
(156) |
- |
- |
(2) |
(158) |
|
Additions |
- |
- |
- |
83 |
83 |
|
Impairment |
- |
- |
- |
(352) |
(352) |
|
As at 30 April 2025 |
72,893 |
5,401 |
46,344 |
616 |
125,254 |
|
|
|
|
|
|
|
|
Amortisation and impairment |
|
|
|
|
|
|
As at 1 May 2023 |
- |
432 |
11,976 |
262 |
12,670 |
|
Amortisation charge |
- |
54 |
3,526 |
103 |
3,683 |
|
Eliminated on disposal |
- |
- |
(1,097) |
- |
(1,097) |
|
As at 30 April 2024 |
- |
486 |
14,405 |
365 |
15,256 |
|
Amortisation charge |
- |
54 |
3,979 |
92 |
4,125 |
|
As at 30 April 2025 |
- |
540 |
18,384 |
457 |
19,381 |
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
At 30 April 2025 |
72,893 |
4,861 |
27,960 |
159 |
105,873 |
|
At 30 April 2024 |
61,788 |
4,915 |
20,027 |
170 |
86,900 |
|
At 30 April 2023 |
59,661 |
4,969 |
23,158 |
233 |
88,021 |
The carrying amount of goodwill of £72,893,000 (2024: £61,788,000) has been allocated to the single cash generating unit (CGU) present in the business, which is the provision of legal and professional services.
The recoverable amount of the Group's goodwill has been determined by a value in use calculation using a discounted cash flow model. The Group has prepared cash flow forecasts derived from the most recent financial budgets approved by management for the next three years after which cash flows are extrapolated using a terminal value calculation based on an estimated growth rate of 2% (2024: 2%). This rate does not exceed the expected average long-term growth rate for the UK legal services market.
The key assumptions for the value in use calculations are those regarding the growth rates for the Group's revenues from legal and professional services, the EBITDA margin and the discount rate. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU.
The rate used to discount the forecast cash flows is based on a pre tax estimated weighted average cost of capital of 12.9% (2024: 13.4%).
Revenue growth over the three years of the forecast period reflects, for FY26, the current run rate of revenue from the Group's existing business and a full year of revenue from acquisitions made during the year ended 30 April 2025, and an element of organic growth in FY27 and FY28 through continued recruitment and increases in chargeable hours and recovered rates. The long-term growth rate is based on UK economic growth forecasts for the legal services market.
The Group has conducted a sensitivity analysis on the impairment test of the CGU value in use. Management considers there is no reasonably plausible scenario under which goodwill would be impaired.
21. Acquisitions
Acquisitions summary
During the year the Group has completed two acquisitions Thursfield Legal Limited and IBB Law LLP. The table below summarises the consideration paid and the net cash flow arising on all acquisitions in the period:
|
|
Total £'000 |
|
Total identifiable assets less liabilities acquired |
18.894 |
|
Goodwill |
11,261 |
|
Total consideration |
30,155 |
|
|
|
|
Satisfied by: |
|
|
Cash |
29,357 |
|
Deferred consideration arrangement |
798 |
|
Total consideration transferred |
30,155 |
|
|
|
|
Net cash outflows arising on acquisition: |
|
|
Cash consideration net of cash acquired |
24,972 |
|
Net investing cash outflow arising on acquisition |
24,972 |
|
|
|
|
Repayment of debt acquired |
172 |
|
Net financing cash outflow arising on acquisition |
172 |
|
|
|
|
Repayment of debt in future years |
932 |
Details for the individual acquisitions are included on the following pages.
The acquisition date in each case is the date of exchange of the sale and purchase agreement, being the date on which control passes and the Group is exposed to variable returns.
Thursfields Legal Limited ('Thursfields')
On 25 July 2024 the Group exchanged contracts to acquire Thursfields by purchasing the shares of the entity. This acquisition completed on 14 September 2024. Thursfields is a law firm which will significantly strengthen Knights' presence in the West Midlands.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below. These figures are provisional as the purchase accounting is not yet finalised:
|
|
Carrying amount £'000 |
Fair value adjustment £'000 |
Total £'000 |
|
Identifiable assets |
|
|
|
|
Identifiable intangible assets |
- |
1,631 |
1,631 |
|
Property, plant and equipment |
552 |
(3) |
549 |
|
Assets held for sale |
208 |
- |
208 |
|
Right-of-use assets |
- |
602 |
602 |
|
Contract assets |
1,947 |
- |
1,947 |
|
Trade and other receivables |
842 |
(66) |
776 |
|
Cash and cash equivalents |
3,899 |
- |
3,899 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(1,712) |
- |
(1,712) |
|
Lease liabilities |
- |
(602) |
(602) |
|
Provisions |
(222) |
5 |
(217) |
|
Deferred tax |
(4) |
(408) |
(412) |
|
Total identifiable assets and liabilities |
5,510 |
1,159 |
6,669 |
|
Goodwill |
|
|
4,453 |
|
Total consideration |
|
|
11,122 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
10,324 |
|
Deferred consideration |
|
|
798 |
|
Total consideration transferred |
|
|
11,122 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
6,424 |
|
Net cash outflow arising on acquisition |
|
|
6,424 |
|
|
|
|
|
Intangibles relating to customer relationships of £1,631,000 has been arrived at using the excess earnings method. The goodwill of £4,453,000 represents the assembled workforce, with the acquisition bringing a number of new fee earners and expected synergies. None of the goodwill is expected to be deductible for income tax purposes.
A contingent consideration arrangement was entered into as part of the acquisition. This is contingent on the sellers remaining in employment with the Group therefore it has been excluded from the consideration and will be recognised in the Consolidated Statement of Comprehensive Income on a straight-line basis as a remuneration expense over the 3 years post-acquisition period. This is recognised within non-underlying operating costs.
The maximum undiscounted amount of all potential future payments under the contingent consideration arrangement is £4,117,000 and is payable in equal instalments on the first, second and third anniversary of completion.
There are also undiscounted deferred consideration payments totalling £883,000 outstanding. This is payable in instalments on the first, second and third anniversaries of completion.
Thursfields contributed £8,164,000 of revenue to the Group's Statement of Comprehensive Income for the period from 27 July 2024 to 30 April 2025. The profit contributed is not separately identifiable due to the hive-up of its trade and assets being incorporated into Knights Professional Services Limited from 14 September 2024.
IBB Law LLP ('IBB')
On 28 February 2025 the Group exchanged contracts to acquire IBB by purchasing the controlling membership interests of the entity. This acquisition completed on 4 April 2025. IBB is a law firm which will significantly strengthen Knights' presence in the South East.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below. These figures are provisional as the purchase accounting is not yet finalised:
|
|
Carrying amount £'000 |
Fair value adjustment £'000 |
Total £'000 |
|
Identifiable assets |
|
|
|
|
Identifiable intangible assets |
352 |
10,281 |
10,633 |
|
Property, plant and equipment |
325 |
11 |
336 |
|
Investments |
132 |
- |
132 |
|
Right-of-use assets |
- |
3,921 |
3,921 |
|
Contract assets |
4,369 |
- |
4,369 |
|
Trade and other receivables |
4,748 |
- |
4,748 |
|
Cash and cash equivalents |
485 |
- |
485 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(3,560) |
281 |
(3,279) |
|
Lease liabilities |
- |
(3,921) |
(3,921) |
|
Borrowings |
(1,043) |
(61) |
(1,104) |
|
Provisions |
(1,421) |
- |
(1,421) |
|
Deferred tax |
- |
(2,674) |
(2,674) |
|
Total identifiable assets and liabilities |
4,387 |
7,838 |
12,225 |
|
Goodwill |
|
|
6,808 |
|
Total consideration |
|
|
19,033 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
19,033 |
|
Deferred consideration |
|
|
- |
|
Total consideration transferred |
|
|
19,033 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
18,548 |
|
Net cash outflow arising on acquisition |
|
|
18,548 |
|
|
|
|
|
Intangibles relating to customer relationships of £10,281,000 has been arrived at using the excess earnings method. The goodwill of £6,808,000 represents the assembled workforce, with the acquisition bringing a number of new fee earners and expected synergies. None of the goodwill is expected to be deductible for income tax purposes.
A contingent consideration arrangement was entered into as part of the acquisition. This is contingent on the sellers remaining in employment with the Group therefore it has been excluded from the consideration and will be recognised in the Consolidated Statement of Comprehensive Income on a straight-line basis as a remuneration expense over the post-acquisition period. This is recognised within non-underlying operating costs.
The maximum undiscounted amount of all potential future payments under the contingent consideration arrangement is £9,000,000 and is payable in equal instalments on the first, second and third anniversary of completion.
IBB contributed £4,334,000 of revenue to the Group's Statement of Comprehensive Income for the period from 28 February 2025 to 30 April 2025. The profit contributed is not separately identifiable due to the hive-up of its trade and assets being incorporated into Knights Professional Services Limited from 4 April 2025.
22. Investments
|
|
Joint ventures £'000 |
Other investments £'000 |
Total £'000 |
|
At 1 May 2024 |
50 |
- |
50 |
|
Acquired |
16 |
350 |
366 |
|
Investment income |
30 |
28 |
58 |
|
Dividends received |
(13) |
- |
(13) |
|
Disposed |
- |
(167) |
(167) |
|
Reclassified as held for sale |
- |
(183) |
(183) |
|
At 30 April 2025 |
83 |
28 |
111 |
On 28 March 2024, the Group acquired 50% of the share capital of Convex Corporate Finance Limited ('Convex') as part of a joint venture with key management personnel of Convex. The initial investment was £50,000 and each joint venturer has equal voting rights. The profit within Convex for the period ending 30 April 2025 was £1,026,000. A share of net assets of £13,000 has been recognised in the Group during the year as the first £1,000,000 of profits in each financial year are allocated to the key management personnel of Convex.
On 28 February 2025, the Group acquired IBB Law LLP, as part of this acquisition, the Group acquired IBB Wealth Limited, a 50% joint venture between IBB Law LLP and Kubera Wealth Limited. During the year the Group has recognised a share of net assets of £16,000 representing 50% of the profit in IBB Wealth Limited in the period post-acquisition.
As part of the Thursfields acquisition, the Group acquired an investment in the capital and current accounts in Thursfields Child Care LLP, this was subsequently disposed of during the year. A 9% investment in respect of Meridies Insurance Company Limited was also acquired, the Group has taken steps to exit this investment during the year and this value has subsequently been classified as held for sale at the year end.
As part of the IBB acquisition, the Group acquired an investment in an insurance captive called Lawnet the Group has taken steps to exit this investment during the year and this value has subsequently been classified as held for sale at the year end.
23. Property, plant and equipment
|
|
Expenditure on short leasehold property £'000 |
Freehold property £'000 |
Long leasehold property £'000 |
Office equipment £'000 |
Furniture and fittings £'000 |
Motor Vehicles £'000 |
Right-of-use assets |
Total £'000 |
|
Cost |
|
|
|
|
|
|
|
|
|
As at 1 May 2023 |
8,690 |
- |
- |
6,452 |
1,317 |
90 |
55,487 |
72,036 |
|
Acquisitions of subsidiaries |
7 |
- |
380 |
35 |
37 |
- |
- |
459 |
|
Additions |
5,297 |
- |
- |
1,424 |
1,444 |
- |
7,076 |
15,241 |
|
Disposals |
(1,178) |
- |
- |
(1,410) |
(262) |
- |
(11,346) |
(14,196) |
|
Impairment |
- |
- |
- |
- |
- |
- |
(882) |
(882) |
|
As at 30 April 2024 |
12,816 |
- |
380 |
6,501 |
2,536 |
90 |
50,335 |
72,658 |
|
Acquisitions of subsidiaries |
137 |
409 |
- |
164 |
178 |
- |
4,522 |
5,410 |
|
Additions |
7,956 |
- |
- |
2,182 |
1,616 |
- |
18,875 |
30,629 |
|
Disposals |
(247) |
- |
- |
(1,154) |
(511) |
- |
(6,216) |
(8,128) |
|
Reclassification to held for sale |
- |
- |
- |
(8) |
- |
- |
- |
(8) |
|
Adjustment |
- |
- |
- |
- |
- |
- |
(260) |
(260) |
|
Impairment |
- |
- |
- |
- |
- |
- |
- |
- |
|
Alignment |
(2) |
- |
- |
(1) |
(3) |
1 |
1 |
(4) |
|
As at 30 April 2025 |
20,660 |
409 |
380 |
7,684 |
3,816 |
91 |
67,257 |
100,297 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment |
|
|
|
|
|
|
|
|
|
As at 1 May 2023 |
2,465 |
- |
- |
3,501 |
568 |
11 |
17,287 |
23,832 |
|
Depreciation charge |
979 |
- |
4 |
1,474 |
176 |
23 |
5,607 |
8,263 |
|
Eliminated on disposal |
(422) |
- |
- |
(1,257) |
(95) |
- |
(5,864) |
(7,638) |
|
Impairment |
- |
- |
- |
- |
- |
- |
(729) |
(729) |
|
As at 30 April 2024 |
3,022 |
- |
4 |
3,718 |
649 |
34 |
16,301 |
23,728 |
|
Depreciation charge |
1,605 |
5 |
4 |
1,410 |
286 |
23 |
5,268 |
8,601 |
|
Eliminated on disposal |
(65) |
- |
- |
(1,009) |
(330) |
- |
(3,025) |
(4,429) |
|
Impairment |
- |
- |
- |
- |
- |
- |
2,078 |
2,078 |
|
Alignment |
- |
- |
- |
(1) |
- |
- |
- |
(1) |
|
As at 30 April 2025 |
4,562 |
5 |
8 |
4,118 |
605 |
57 |
20,622 |
29,977 |
|
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
At 30 April 2025 |
16,098 |
404 |
372 |
3,566 |
3,211 |
34 |
46,635 |
70,320 |
|
At 30 April 2024 |
9,794 |
- |
376 |
2,783 |
1,887 |
56 |
34,034 |
48,930 |
|
At 30 April 2023 |
6,225 |
- |
- |
2,951 |
749 |
79 |
38,200 |
48,204 |
Net impairment charges of £2,078,000 (2024: £153,000) due to leases being classified as onerous are included in non-underlying operating costs (see note 13).
See note 30 for further details of right of use assets.
24. Contract assets and liabilities
|
|
Contract assets £'000 |
Trade receivables |
Contract liabilities £'000 |
|
At 30 April 2025 |
50,998 |
30,639 |
(130) |
|
At 30 April 2024 |
40,191 |
25,931 |
(188) |
|
At 30 April 2023 |
38,215 |
23,610 |
(218) |
The movement during the year is not separately identifiable.
Contract assets
Contract assets consist of unbilled revenue in respect of legal and professional services performed to date.
Contract assets in respect of fee-for-service and fixed fee arrangements are billed at appropriate intervals, normally on a monthly basis in arrears, in line with the performance of the services. Where such matters remain unbilled at the period end the asset is valued on a contract-by-contract basis at its expected recoverable amount.
The Group undertakes some matters based on contingent fee arrangements. These matters are billed when the claim is successfully settled. For matters ongoing at the period end, each matter is valued based on its specific circumstances. If the matter has agreed funding arrangements in place, then it is valued based on the estimated amount recoverable from the funding depending on the stage of completion of the matter.
If the liability of a matter has been admitted and performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance obligations may be settled in one period but the matter not billed until a later financial period. The amount of contingent fee work in progress at 30 April 2025 was £12,836,000 (2024: £13,070,000).
If the performance obligations for contingent matters have not been satisfied at the reporting date, these assets are valued on a contract-by-contract basis taking into account the expected recoverable amount and the likelihood of success. Where the likelihood of success of a contingent fee arrangement is less than highly probable, the amount recognised in contract assets is further reduced to reflect this uncertainty.
During the year, contract assets of £6,316,000 (2024: £344,000) were acquired in business combinations.
An impairment loss of £48,000 has been recognised in relation to contract assets in the year (2024: £36,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The contract asset loss is estimated at 0.2% (2024: 0.2%) of the balance.
Trade receivables
Trade receivables are recognised when a bill has been issued to the client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Trade receivables also includes disbursements.
Bills are payable within thirty days of date of issue unless otherwise agreed with the client.
Contract liabilities
When matters are billed in advance or on the basis of a monthly retainer, this is recognised in contract liabilities and released over time as the services are performed.
25. Trade and other receivables
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Trade receivables |
32,023 |
26,694 |
|
Impairment provision - trade receivables |
(1,384) |
(763) |
|
Prepayments and other receivables |
8,913 |
6,822 |
|
Amount owed from joint venture |
2,000 |
2,523 |
|
|
41,552 |
35,276 |
|
Trade and other receivables |
30 April 2025 £'000 |
30 April 2024 £'000 |
|
> 1 year |
2,000 |
2,523 |
|
< 1 year |
39,552 |
32,753 |
|
|
41,552 |
35,276 |
Trade receivables
The average credit period taken on sales is 31 days as at 30 April 2025 (2024: 28 days). No interest is charged on trade receivables. The Group uses appropriate methods to recover all balances once overdue. Once the expectation of recovery is deemed remote a debt may be written off.
The Group measures the loss allowance for trade receivables at an amount equal to 12 months expected credit losses ('ECL'). The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of a provision matrix when measuring the expected loss provision for all trade receivables. As the Group's expected credit loss experience does not show significantly different loss patterns for different client segments, the provision for loss allowance is based on past due status.
The following table details the risk profile of trade receivables (excluding disbursements) based on the Group's provision matrix:
|
|
30 April 2025 |
30 April 2024 |
|||||
|
|
Gross carrying amount |
Expected credit losses |
Expected credit loss rate |
Gross carrying amount |
Expected credit losses |
Expected credit loss rate |
|
|
|
£'000 |
£'000 |
% |
£'000 |
£'000 |
% |
|
|
Not past due |
18,287 |
52 |
0.28 |
14,893 |
42 |
0.28 |
|
|
1-30 days past due |
2,765 |
19 |
0.67 |
3,667 |
14 |
0.38 |
|
|
31-60 days past due |
1,933 |
6 |
0.33 |
1,378 |
5 |
0.36 |
|
|
61-90 days past due |
398 |
1 |
0.33 |
209 |
1 |
0.48 |
|
|
>91 days past due |
3,740 |
510 |
13.65 |
2,176 |
605 |
27.80 |
|
|
12 month ECL £'000 |
27,123 |
588 |
2.17 |
22,323 |
667 |
2.99 |
|
In addition to the above on trade receivables a further £284,000 (2024: £96,000) impairment loss has been recognised against disbursement balances (excluding CL Medilaw). This is based on 100% impairment against all disbursements with no activity on the matter for over 12 months and 0.3% against the remainder of the balance based upon the expected credit loss of this type of asset.
The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as follows:
|
|
2025 |
2024 |
|
|
£'000 |
£'000 |
|
Balance at 1 May |
763 |
914 |
|
Increase in loss allowance recognised in profit and loss during the year |
1,241 |
489 |
|
Acquired provisions |
814 |
129 |
|
Receivables written off during the year as uncollectable |
(1,434) |
(769) |
|
Balance at 30 April |
1,384 |
763 |
26. Finance lease receivable
The Group sub-leases floors in three office buildings on head leases that were acquired in previous periods. The Group has classified the sub-leases as finance leases because the sub-leases are for the whole of the remaining term of the head leases.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Less than one year |
457 |
424 |
|
One to two years |
457 |
424 |
|
Two to three years |
457 |
424 |
|
Three to four years |
436 |
424 |
|
Four to five years |
151 |
406 |
|
More than five years |
73 |
225 |
|
|
2,031 |
2,327 |
|
Less: unearned finance income |
(291) |
(330) |
|
|
1,740 |
1,997 |
|
|
|
|
|
Finance lease receivable |
30 April 2025 £'000 |
30 April 2024 £'000 |
|
> 1 year |
1,335 |
1,633 |
|
< 1 year |
405 |
364 |
|
|
1,740 |
1,997 |
Total lease payments received for the year ended 30 April 2025 was £458,000 (2024: £405,000).
The Group's finance lease arrangements do not include variable payments.
The directors of the Group estimate the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime ECL. None of the finance lease receivables at the end of the reporting period are past due, and considering the historical default experience and the future prospects of the sectors in which the lessees operate, the directors of the Group consider that no finance lease receivable is impaired.
27. Disposal of assets and liabilities held for sale
IBB Crime
On 4 April 2025 the Group completed the acquisition of IBB Law LLP which included a legal aid funded crime business. At the time of acquisition, it was noted that this work-type, which is considered non-core to Knights, would be reviewed following completion.
In April 2025, management committed to a plan to sell the legal aid funded crime business. Accordingly, all assets and liabilities are presented as assets and liabilities held for sale. Efforts to sell the crime business commenced and on 18 July 2025, the Group completed the sale of the crime business.
No fair value gains or losses have been recognised on reclassification as fair values of assets and liabilities are deemed to be equal to the carrying value at the period end.
As at 30 April 2025, the crime business was stated at fair value less cost to sell and comprised of the following assets and liabilities:
|
|
30 April 2025 £'000 |
|
Tangible assets |
8 |
|
Contract assets |
358 |
|
Trade and other receivables |
655 |
|
Cash and cash equivalents |
79 |
|
Assets held for sale |
1,100 |
|
|
30 April 2025 £'000 |
|
Trade and other payables |
(889) |
|
Liabilities held for sale |
(889) |
Assets held for sale do not include £246,000 due to other group entities which have been eliminated on consolidation.
Other assets and liabilities held for sale
During the year, Knights acquired unlisted investments as part of the acquisitions of Thursfields Legal Limited and IBB Law LLP. At 30 April 2025, the Group has committed to disposing its share in these investments in line with the terms of share agreement for the individual investments.
|
Assets held for sale |
IBB Crime |
Other investments £'000 |
Total £'000 |
|
At 1 May 2024 |
- |
- |
- |
|
Additions |
1,100 |
183 |
1,283 |
|
At 30 April 2025 |
1,100 |
183 |
1,283 |
|
|
|
|
|
|
Liabilities held for sale |
IBB Crime |
Other investments £'000 |
Total £'000 |
|
At 1 May 2024 |
- |
- |
- |
|
Additions |
(889) |
- |
(889) |
|
At 30 April 2025 |
(889) |
- |
(889) |
28. Share capital
|
|
Ordinary shares |
|
|
|
Number |
£'000 |
|
As at 1 May 2023 |
85,813,976 |
171 |
|
Changes during the period |
|
|
|
Ordinary shares of 0.2p each issued in respect of exercised share options |
100,184 |
- |
|
At 30 April 2024 (allotted, called up and fully paid) |
85,914,160 |
171 |
|
Changes during the period |
|
|
|
Ordinary shares of 0.2p each issued in respect of exercised share options |
53,148 |
- |
|
At 30 April 2025 (allotted, called up and fully paid) |
85,967,308 |
171 |
29. Treasury Shares
At 30 April 2025, the Group held treasury shares with a total value of £576,000 (2024: £nil). These shares are held to satisfy obligations under the Group's share-based payment schemes.
During the year, the Group purchased 499,283 of its own ordinary shares to be held in treasury. These purchases were made throughout the year; the total cost of these purchases was £598,000. Additionally, 19,799 shares were transferred out of treasury during the year to satisfy employee share option exercises. The shares transferred were valued at £22,000, based on a FIFO costs basis.
|
|
Treasury shares |
|
|
|
Number |
£'000 |
|
As at 1 May 2024 |
- |
- |
|
Changes during the period |
|
|
|
Treasury shares purchased |
(499,283) |
(598) |
|
Treasury shares issued in respect of exercised share options |
19,799 |
22 |
|
At 30 April 2025 |
(479,484) |
(576) |
Treasury shares are deducted from equity in accordance with IAS 32 Financial Instruments: Presentation. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Any dividends on treasury shares are waived.
30. Lease liabilities
Incremental borrowing rates applied to individual leases ranged between 1.7% and 8.3%.
The table below sets out the Consolidated Statement of Financial Position as at 30 April 2025 and 30 April 2024:
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Right-of-use assets |
|
|
|
Property |
46,115 |
33,496 |
|
Equipment |
520 |
538 |
|
|
46,635 |
34,034 |
|
Lease liability |
|
|
|
> 1 year |
48,603 |
35,389 |
|
< 1 year |
5,666 |
5,181 |
|
|
54,269 |
40,570 |
Right of use assets include additions and acquired assets of £23,250,000 (2024: £6,565,000) for property and £27,000 (2024: £511,000) for equipment. The related depreciation charge for the year is £5,102,000 (2024: £5,127,000) for property and £165,000 (2024: £480,000) for equipment.
The table below shows lease liabilities maturity analysis - contractual undiscounted cash flows at 30 April 2025:
|
|
30 April 2025 |
30 April 2024 |
||||
|
|
£'000 |
£'000 |
Total £'000 |
£'000 |
£'000 |
Total £'000 |
|
Less than one year |
8,058 |
202 |
8,260 |
6,810 |
188 |
6,998 |
|
One to five years |
28,731 |
457 |
29,188 |
23,485 |
509 |
23,994 |
|
More than five years |
34,434 |
3 |
34,437 |
20,342 |
- |
20,342 |
|
|
71,223 |
662 |
71,885 |
50,637 |
697 |
51,334 |
|
Less unaccrued future interest |
(17,517) |
(99) |
(17,616) |
(10,658) |
(106) |
(10,764) |
|
|
53,706 |
563 |
54,269 |
39,979 |
591 |
40,570 |
The table below shows amounts recognised in the Consolidated Statement of Comprehensive Income for short term and low value leases as at 30 April 2025:
|
|
30 April 2025 |
30 April 2024 |
||||
|
|
|
|
|
|
|
|
|
Expenses relating to short - term and low value leases |
61 |
1 |
62 |
215 |
32 |
247 |
For right-of-use asset depreciation and lease interest charges on leases see note 11 and 14.
Total lease payments, including payments for short term and low value leases, for the year ended 30 April 2025 were £7,307,000 (2024: £7,502,000).
31. Borrowings
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Secured borrowings at amortised cost: |
|
|
|
Bank loans |
69,400 |
39,800 |
|
Other loans |
1,282 |
817 |
|
Total borrowings |
70,682 |
40,617 |
|
Amount due for settlement within 12 months |
875 |
468 |
|
Amount due for settlement after 12 months |
69,807 |
40,149 |
The above excludes lease liabilities.
All of the Group's borrowings are denominated in sterling.
The Group has a credit facility of £100,000,000 in total (2024: £70,000,000). The facility remains available until 7 November 2027.
The facility is a revolving credit facility and has the ability to roll on a monthly, quarterly, half yearly basis or any other period at the Groups option and is due for final repayment in November 2027. The facility is secured by a fixed and floating charge over the Group's assets. The facility carries an interest margin above SONIA of between 1.65% and 2.55% depending on the leverage level. A commitment fee of one third of the applicable margin is payable on the undrawn amounts.
32. Deferred consideration
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Non-current liabilities |
|
|
|
Deferred consideration |
563 |
350 |
|
|
|
|
|
Current liabilities |
|
|
|
Deferred consideration |
612 |
2,591 |
Deferred consideration as at 30 April 2025 relates to the acquisition of Coffin Mew LLP, St James' Law Limited and Thursfields Legal Limited and is not contingent.
In addition, the Group has accrued contingent acquisition payments relating to acquisitions included within trade and other payables. This is contingent based upon the continued employment of certain individuals and is being accrued on a monthly basis in the Consolidated Statement of Comprehensive Income in accordance with the terms of the agreements. It is expected that employment will continue for the terms of the agreements and, therefore, the contingent acquisition payments will be payable in full.
33. Deferred tax
The following are the major deferred tax liabilities and (assets) recognised by the Group and movements thereon during the current and prior reporting period.
|
|
Accelerated capital allowances £'000 |
Intangible assets £'000 |
Share-based payments £'000 |
Unpaid employer contributions £'000 |
IFRS 16 £'000 |
Total £'000 |
|
As at 1 May 2023 |
1,376 |
7,032 |
(459) |
- |
439 |
8,388 |
|
Acquisitions of subsidiaries |
26 |
99 |
- |
- |
- |
125 |
|
Charge/(credit) for the year |
947 |
(895) |
(221) |
(1) |
(55) |
(225) |
|
As at 30 April 2024 |
2,349 |
6,236 |
(680) |
(1) |
384 |
8,288 |
|
Acquisitions of subsidiaries |
4 |
2,978 |
- |
- |
104 |
3,086 |
|
Charge/(credit) for the year |
1,273 |
(1,008) |
(268) |
(87) |
(67) |
(157) |
|
As at 30 April 2025 |
3,626 |
8,206 |
(948) |
(88) |
421 |
11,217 |
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the deferred tax balances after offset for financial reporting purposes:
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Deferred tax assets |
(1,036) |
(681) |
|
Deferred tax liabilities |
12,253 |
8,969 |
|
|
11,217 |
8,288 |
34. Trade and other payables
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Trade payables |
6,915 |
5,574 |
|
Other taxation and social security |
9,291 |
7,435 |
|
Other payables |
2,675 |
1,281 |
|
Accruals |
7,781 |
5,645 |
|
|
26,662 |
19,935 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 22 days (2024: 22 days). No interest is payable on the trade payables.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Included within other payables is a contingent acquisition payments liability, this arises on acquisition and the liability is contingent on employees completing a specified length of service. As at 30 April 2025 £2,458,000 of contingent acquisition payments are included within other payables (2024: £1,277,000). The total potential value of the contingent liability is £12,252,000 (2024: £2,960,000).
35. Provisions
|
|
Dilapidation provision £'000 |
Onerous contract provision £'000 |
Professional indemnity provision |
Total £'000 |
|
As at 1 May 2023 |
4,827 |
282 |
1,326 |
6,435 |
|
Acquisitions of subsidiaries |
38 |
- |
10 |
48 |
|
Additional provision in the year |
853 |
66 |
1,125 |
2,044 |
|
Utilisation of provision |
(957) |
(104) |
(1,164) |
(2,225) |
|
As at 30 April 2024 |
4,761 |
244 |
1,297 |
6,302 |
|
Acquisitions of subsidiaries |
1,492 |
- |
145 |
1,637 |
|
Additional provision in the year |
902 |
762 |
772 |
2,436 |
|
Utilisation of provision |
(429) |
(128) |
(763) |
(1,320) |
|
As at 30 April 2025 |
6,726 |
878 |
1,451 |
9,055 |
|
Consisting of: |
|
|
|
|
|
Non-current liabilities |
4,693 |
711 |
- |
5,404 |
|
Current liabilities |
2,033 |
167 |
1,451 |
3,651 |
The dilapidations provision relates to the potential rectification of leasehold sites upon expiration of the leases. This has been based on internal estimates of the schedule of works included in the lease.
The onerous contract provision relates to service charges on vacant offices where the Group is the lessee. The Group is actively marketing these leases for reassignment. The provision represents the Directors' estimate of the future service charge costs to be paid by the Group prior to reassignment of the leases. The onerous contracts provision also includes contracts acquired via acquisition that are no longer utilised but are non-cancellable. The provision represents the present value of the remaining payments under the terms of the lease. Future service charge payments are offset against the provision.
The professional indemnity provision relates to a number of disputes in the ordinary course of business for all claims where costs are likely to be incurred and represents the cost of defending and concluding claims and any excess amounts that may become payable. The Group carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance as to do so could seriously prejudice the position of the Group.
36. Financial instruments
Categories of financial instruments
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Financial assets |
|
|
|
Amortised cost |
|
|
|
Contract assets |
50,998 |
40,191 |
|
Trade and other receivables (excluding prepayments) |
33,699 |
29,134 |
|
Lease receivable |
1,741 |
1,997 |
|
Cash and cash equivalents |
5,853 |
5,453 |
|
Financial liabilities |
|
|
|
Amortised cost |
|
|
|
Borrowings |
70,682 |
40,617 |
|
Deferred consideration |
1,175 |
2,941 |
|
Trade and other payables |
14,913 |
11,223 |
|
Leases |
54,269 |
40,570 |
Financial risk management objectives
The Group's Executive board and finance function monitors and manages the financial risks relating to the operations of the Group. These risks include market risk (interest rate risk), credit risk, liquidity risk and cash flow interest rate risk.
Market risk
The Group's activities expose it primarily to the financial risks of changes in interest rates (see below). Market risk exposures are measured using sensitivity analysis.
There has been no change to the Group's exposure to market risks or the manner in which these risks are managed and measured.
Interest rate risk management
The Group is exposed to interest rate risk because the Group borrows funds at floating interest rates. The risk is managed by the Group by keeping the level of borrowings at a manageable level. The Group is also exposed as it holds client monies where interest is received at floating interest rates. This risk is managed by ensuring that the Group holds client monies with banks where interest rates are maximised. Overall the Group do not see interest rate risk as a significant risk as fluctuations in rates would impact both interest receivable and payable amounts. The operations of the Group are not dependent on the finance income received.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the end of the reporting period. For floating rate liabilities, the sensitivity is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.
If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group's profit for the year ended 30 April 2025 would decrease/increase by £353,000 (2024: decrease/increase by £203,000). This is attributable to the Group's exposure to interest rates on its variable rate borrowings.
For floating rate assets, the sensitivity is prepared taking an average client balance held throughout the year.
If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group's profit for the year ended 30 April 2025 would decrease/increase by £1,275,000 (2024: decrease/increase by £956,000). This is attributable to the Group's exposure to interest rates on its variable rate client monies held.
Credit risk management
Note 25 details the Group's maximum exposure to credit risk and the measurement bases used to determine expected credit losses.
The risk of bad debts is mitigated by the Group having a policy of performing credit checks or receiving payments on account for new clients when practical and ensuring that the Group's exposure to any individual client is tightly controlled, through credit control policies and procedures.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the financial charges on its debt instruments and repayments of principal. There is a risk that the Group will encounter difficulty in meeting its financial obligations as they fall due or not meet its required covenants. The Group manages this risk and its cash flow requirements through detailed annual, monthly and daily cash flow forecasts. These forecasts are reviewed regularly to ensure that the Group has sufficient working capital to enable it to meet all of its short-term and long-term cash flow needs.
Measurement of fair values
Financial assets and liabilities are measured in accordance with the fair value hierarchy and assessed as Level 1, 2 or 3 based on the following criteria:
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Based on the Groups financial instruments disclosed at fair value, cash is level 1, borrowings is level 2 and deferred consideration is level 3. The remaining financial instruments are measured at amortised cost.
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Contractual maturities of financial liabilities
|
30 April 2025 |
< 1 year £'000 |
1-2 years £'000 |
2-5 years |
Total |
|
Borrowings |
875 |
585 |
69,222 |
70,682 |
|
Deferred consideration |
612 |
563 |
- |
1,175 |
|
Trade and other payables |
17,371 |
- |
- |
17,371 |
|
30 April 2024 |
< 1 year £'000 |
1-2 years £'000 |
2-5 years |
Total |
|
Borrowings |
468 |
55 |
40,094 |
40,617 |
|
Deferred consideration |
2,591 |
350 |
- |
2,941 |
|
Trade and other payables |
12,501 |
- |
- |
12,501 |
Trade and other payables above exclude other taxation and social security costs.
The Group has met its covenant tests during the year.
For lease maturity see note 30.
Capital management
The capital structure of the Group consists of borrowings (as disclosed in note 31) and equity of the Group (comprising issued capital, reserves, and retained earnings as disclosed in the Consolidated Statement of Changes in Equity).
In managing its capital, the Group's primary objective is to provide a return for its equity shareholders through capital growth and future dividend income. The Group seeks to maintain a gearing ratio that balances risk and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs and objectives.
Gearing ratio
The gearing ratio at the year end is as follows:
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Borrowings (note 31) |
70,682 |
40,617 |
|
Cash and cash equivalents |
(5,853) |
(5,453) |
|
Net debt |
64,829 |
35,164 |
|
Equity |
104,532 |
100,260 |
|
|
% |
% |
|
Net debt to equity ratio |
62 |
35 |
Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and the bases for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in note 2.
37. Reconciliation of profit before taxation to net cash generated from operations
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Profit before taxation |
12,269 |
14,831 |
|
Adjustments for: |
|
|
|
Amortisation on computer software |
92 |
103 |
|
Amortisation on acquired intangibles |
4,033 |
3,580 |
|
Depreciation - property, plant and equipment |
3,333 |
2,656 |
|
Depreciation - right-of-use assets |
5,223 |
5,607 |
|
Loss on disposal (net of £315,000 (2024: £930,000 loss) included in non-underlying costs) |
192 |
144 |
|
Contingent acquisition payments |
3,752 |
2,824 |
|
Other non-underlying operating costs |
7,703 |
3,806 |
|
Non-underlying finance costs |
246 |
281 |
|
Share-based payments |
1,194 |
1,121 |
|
Non-operating income |
(48) |
- |
|
Finance income |
(302) |
(89) |
|
Finance costs |
6,445 |
4,939 |
|
Operating cash flows before movements in working capital |
44,132 |
39,803 |
|
(Increase) in contract assets |
(4,850) |
(1,632) |
|
(Increase) in trade and other receivables |
(1,903) |
(767) |
|
Increase in provisions |
71 |
29 |
|
(Decrease) in contract liabilities |
(58) |
(29) |
|
Increase/(Decrease) in trade and other payables |
1,619 |
(1,150) |
|
Cash generated from operations |
39,011 |
36,254 |
38. Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's Consolidated Statement of Cash Flows as cash flows from financing activities.
|
|
Borrowings £'000 |
Leases |
|
As at 1 May 2023 |
33,265 |
44,916 |
|
New borrowings and leases |
23,200 |
6,690 |
|
Acquired borrowings and leases |
638 |
- |
|
Finance costs |
3,402 |
1,537 |
|
Interest and other finance costs paid |
(2,965) |
(1,537) |
|
Unpaid interest not applied to principal |
(437) |
- |
|
Non-cash movement |
5 |
(5,378) |
|
Repayment of debt acquired with prior year subsidiaries |
(166) |
- |
|
Repayments |
(16,325) |
(5,113) |
|
Amounts included in operating activities |
- |
(545) |
|
As at 30 April 2024 |
40,617 |
40,570 |
|
New borrowings and leases |
52,150 |
17,750 |
|
Adjustments to existing leases |
- |
70 |
|
Acquired borrowings and leases |
1,033 |
4,595 |
|
Interest charged |
4,133 |
2,312 |
|
Interest paid |
(4,067) |
(2,312) |
|
Unpaid interest not applied to principal |
(66) |
- |
|
Non-cash movement |
6 |
(3,659) |
|
Repayment of debt acquired with current year subsidiaries |
(172) |
- |
|
Repayment of debt acquired with prior year subsidiaries |
(473) |
- |
|
Repayments |
(22,550) |
(4,661) |
|
Amounts included in operating activities |
71 |
(393) |
|
As at 30 April 2025 |
70,682 |
54,272 |
39. Alternative performance measures
This Annual Report contains both statutory measures and alternative performance measures. In management's view the underlying performance of the business provides a more meaningful measure and year on year comparison of how the Group's business is managed and measured on a day-to-day basis.
The Group's alternative performance measures and key performance indicators are aligned to the Group's strategy and together are used to measure the performance of the business.
Alternative performance measures are non-GAAP (Generally Accepted Accounting Practice) measures and provide supplementary information to assist with the understanding of the Group's financial results and with the evaluation of operating performance for all the periods presented. Alternative performance measures, however, are not a measure of financial performance under UK-adopted International Accounting Standards ('IAS') and should not be considered as a substitute for measures determined in accordance with IFRS. As the Group's alternative performance measures are not defined terms under IFRS they may therefore not be comparable with similarly titled measures reported by other companies.
Reconciliations of alternative performance measures to the most directly comparable measures reported in accordance with IFRS are provided below.
a) Underlying EBITDA
Underlying EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group excluding the effects of depreciation, amortisation and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Operating profit |
18,600 |
19,962 |
|
Depreciation and amortisation charges (note 11) |
12,873 |
12,090 |
|
Non-underlying operating costs (note 13) |
11,455 |
6,630 |
|
Underlying EBITDA |
42,928 |
38,682 |
|
Depreciation of right of use assets (note 11) |
(5,223) |
(5,607) |
|
Interest on leases (note 14) |
(2,312) |
(1,537) |
|
Lease interest receivable (note 15) |
63 |
66 |
|
Underlying EBITDA post IFRS16 charges |
35,456 |
31,604 |
Underlying EBITDA post IFRS 16 is used as a metric as this reflects the profits after deduction of rental costs which is most comparable to the EBITDA reported at IPO, before the introduction of IFRS 16.
b) Underlying profit before tax (PBT)
Underlying PBT is presented as an alternative performance measure to show the underlying performance of the Group excluding the effects of amortisation of acquired intangible assets and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Profit before tax |
12,269 |
14,831 |
|
Amortisation on acquired intangibles (note 11) |
4,033 |
3,580 |
|
Non-underlying operating costs (note 13) |
11,455 |
6,630 |
|
Non-underlying finance costs (note 13) |
246 |
281 |
|
Underlying profit before tax |
28,003 |
25,322 |
c) Underlying operating profit to underlying profit after tax (PAT)
Underlying PAT is presented as an alternative performance measure to show the underlying performance of the Group excluding the effects of investment income, finance costs and income.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Operating profit before non-underlying charges |
34,088 |
30,172 |
|
Investment income (note 22) |
58 |
- |
|
Finance costs (note 14) |
(6,445) |
(4,939) |
|
Finance income (note 15) |
302 |
89 |
|
Underlying profit before tax |
28,003 |
25,322 |
|
Taxation |
(7,448) |
(6,598) |
|
Underlying profit after tax |
20,555 |
18,724 |
d) Underlying profit after tax (PAT) and adjusted earnings per share (EPS)
Underlying PAT and EPS are presented as alternative performance measures to show the underlying performance of the Group excluding the effects of amortisation of intangible assets, share-based payments and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
|
|
|
|
Profit after tax |
7,576 |
9,847 |
|
Amortisation on acquired intangibles (note 11) |
4,033 |
3,580 |
|
Non-underlying costs (note 13) |
11,701 |
6,911 |
|
Tax impact of non-underlying costs (note 17) |
(2,755) |
(1,614) |
|
Underlying profit after tax |
20,555 |
18,724 |
|
Underlying earnings per share |
Pence |
Pence |
|
Basic underlying earnings per share |
23.95 |
21.81 |
|
Diluted underlying earnings per share |
22.88 |
21.13 |
Tax has been calculated at the corporation tax rate of 25% (2024: 25%) and deferred tax rate of 25% (2024: 25%)
e) Free cash flow and cash conversion %
Free cash flow measures the Group's underlying cash generation. Cash conversion % measures the Group's conversion of its underlying PAT into free cash flows. Free cash flow is calculated as the total of net cash from operating activities after adjusting for tax paid and the impact of IFRS 16 cash flows. Cash conversion % is calculated by dividing free cash flow by underlying PAT, which is reconciled to profit after tax above.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Cash generated from operations (note 37) |
39,011 |
36,254 |
|
Tax paid |
(5,820) |
(5,432) |
|
Net underlying cash outflow for IFRS16 leases |
(6,515) |
(6,245) |
|
Free cashflow |
26,676 |
24,577 |
|
Underlying profit after tax |
20,555 |
18,724 |
|
Cash conversion (%) |
130% |
131% |
f) Net debt
Net debt is presented as an alternative performance measure to show the net position of the Group after taking account of bank borrowings and cash at bank and in hand.
|
|
30 April 2025 £'000 |
30 April 2024 £'000 |
|
Borrowings (note 31) |
70,682 |
40,617 |
|
Cash and cash equivalents |
(5,853) |
(5,453) |
|
Net debt |
64,829 |
35,164 |
40. Capital commitments
As at 30 April 2025 there is a capital commitment of £361,000 (2024: £6,342,000).
41. Defined benefit pension schemes
The Stonehams Pension Scheme
The Group operates a legacy defined benefit pension arrangement, the Stonehams Pension Scheme (the "Scheme"). The Scheme provides benefits based on salary and length of service on retirement, leaving service, or death. The following disclosures exclude any allowance for any other pension schemes operated by the Group.
The Scheme was acquired as part of the acquisition of ASB Law where contracts were exchanged on 5 March 2020. Therefore, the disclosures below represent the period of ownership from 5 March 2020 to 30 April 2025. The scheme is closed and provides benefits for 38 legacy employees (now pensioners and deferred members).
The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried out at least once every three years to determine whether the Statutory Funding Objective is met. As part of the process the Group must agree with the Trustees of the Scheme the contributions to be paid to address any shortfall against the Statutory Funding Objective.
The most recent comprehensive actuarial valuation of the Scheme was carried out as at 31 December 2021. The results of that valuation were updated to 30 April 2025 allowing for cashflows in and out of the Scheme and changes to assumptions over the period.
From March 2023 it was agreed that Employer contributions towards administration expenses would be deferred until January 2026. Administration expenses are to be met directly from the assets of the Scheme. The Group will separately meet the cost of the PPF levy.
The Scheme typically exposes the Group to actuarial risks such as: investment risk, interest rate risk and longevity risk.
|
Investment risk |
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Currently assets are invested in a variety of funds, which will reduce volatility. The investment approach is reviewed every three years as part of the valuation process. |
|
Interest risk |
There is some hedging in the asset portfolio, but at a low level. A decrease in the bond interest rate will increase the plan liability but this will be partially offset by an increase in the return on the plan's debt investments. |
|
Longevity risk |
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability. The average duration of the Scheme's obligations is 12 years. |
Actuarial assumptions
Principal actuarial assumptions
|
|
% |
% |
|
|
|
Discount rate |
5.50 |
5.06 |
|
|
|
Retail Prices Index ("RPI") Inflation |
3.15 |
3.57 |
|
|
|
Consumer Price Index ("CPI") Inflation |
2.25 |
2.67 |
|
|
|
Pension increase (LPI 5%) |
3.05 2.13 |
3.40 2.25 |
|
|
|
Post retirement mortality |
Males: 90% S3PMA Females: 100% S3PFA (CMI 2023 model) using a long term improvement rate of 1% |
106%/99% (m/f) S2PA CMI_2022 projections using a long-term improvement rate of 1.5% pa and initial addition of 0.3% |
|
|
|
Commutation |
80% of members are assumed to take the maximum tax free cash possible using current commutation factors |
80% of members are assumed to take the maximum tax free cash possible using current commutation factors |
|
|
|
|
|
|
|
|
|
Life expectancy at age 65 of male aged 65 |
22.1 |
22.0 |
|
|
|
Life expectancy at age 65 of female aged 65 |
23.8 |
23.8 |
|
|
|
Life expectancy at age 65 of male aged 45 |
23.0 |
23.0 |
|
|
|
Life expectancy at age 65 of female aged 45 |
24.9 |
24.9 |
|
|
|
|
|
|
|
|
|
The weighted average duration of the Scheme's obligations is 12 years. |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
The current asset split is as follows |
|
|
|
|
|
|
Asset allocation at 30 April 2025 |
Asset allocation at 30 April 2024 |
|
|
|
Equities and growth assets |
50% |
51% |
|
|
|
Bonds, LDI and cash |
50% |
49% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value as at 30 April |
Value as at 30 April |
|
|
|
Fair value of assets |
1,982 |
2,132 |
|
|
|
Present value of funded obligations |
(1,467) |
(1,605) |
|
|
|
Surplus in scheme |
515 |
527 |
|
|
|
Deferred tax |
- |
- |
|
|
|
Net defined benefit surplus after deferred tax |
515 |
527 |
|
|
|
|
|
|
|
|
|
The fair value of the assets can be analysed as follows: |
|
|
|
|
|
|
Value as at 30 April |
Value as at 30 April |
|
|
|
Low risk investment funds |
984 |
1,050 |
|
|
|
Credit Investment funds |
604 |
647 |
|
|
|
Cash |
394 |
435 |
|
|
|
Fair value of assets |
1,982 |
2,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
|
Administration costs |
39 |
36 |
|
|
|
Net interest on liabilities |
(26) |
(27) |
|
|
|
Total charge to the Statement of Comprehensive Income |
13 |
9 |
|
|
|
|
|
|
|
|
|
Remeasurements over the period since acquisition
|
|
|
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
|
Loss on assets in excess of interest |
(105) |
(115) |
|
|
|
Gain on scheme obligation from assumptions and experience |
127 |
31 |
|
|
|
Loss on scheme obligations due to scheme experience |
(21) |
8 |
|
|
|
Gain on scheme obligations from demographic assumptions |
- |
34 |
|
|
|
Total remeasurements |
1 |
(42) |
|
|
|
|
|
|
|
|
|
The change in value of assets |
|
|
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
|
Fair value of assets brought forward |
2,132 |
2,314 |
|
|
|
Interest on assets |
104 |
105 |
|
|
|
Benefits paid |
(110) |
(136) |
|
|
|
Administration costs |
(39) |
(36) |
|
|
|
Loss on assets in excess of interest |
(105) |
(115) |
|
|
|
Fair value of assets carried forward |
1,982 |
2,132 |
|
|
|
|
|
|
|
|
|
Actual return on assets |
(1) |
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of liabilities |
|
|
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
|
Value of liabilities brought forward |
1,605 |
1,736 |
|
|
|
Interest cost |
78 |
78 |
|
|
|
Benefits paid |
(110) |
(136) |
|
|
|
Actuarial gain |
(106) |
(73) |
|
|
|
Value of liabilities carried forward |
1,467 |
1,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity of the value placed on the liabilities |
|
|
|
|
|
Approximate effect on liability |
|
|
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
|
Discount rate |
|
|
|
|
|
Minus 0.50% |
78 |
93 |
|
|
|
Inflation |
|
|
|
|
|
Plus 0.50% |
64 |
70 |
|
|
|
Life Expectancy |
|
|
|
|
|
Plus 1.0 years |
41 |
49 |
|
|
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, inflation rate and mortality. The sensitivity analysis above has been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The With Profits Section of the Cheviot pension
Allocation of liabilities between employers
The With Profits Section was acquired initially as part of the acquisition of ASB Law where the transaction completed on 17 April 2020. However a couple of recent acquisitions have also been legacy members of the scheme resulting in an increased overall percentage for Knights.
The Trustee has discretion under the contribution rule on how the cost of providing the benefits of the With Profits Section is allocated between employers. The contribution rule applies until the earlier of the discharge of the employer by the Trustee and the termination of the With Profits Section. The Trustee's current policy is not to discharge employers. Employers therefore remain liable under the contribution rule even if their last member dies or transfers out.
The Trustee has been considering how best to ensure all employers bear an appropriate share of the With Profits Section's obligations whilst ensuring fairness between employers and a practical and transparent methodology for the future.
As discussed at the Employers' Meeting on 5 July 2017, the Trustee has decided to fix the allocation between employers on the basis of the promised benefits just before the Section was re-classified in 2014 (the valuation as at 31 December 2013). The allocation to each employer will be expressed as a percentage of the total Scheme liabilities. The intention is to apply this percentage to any funding, buyout or IFRS deficit in the future to calculate any contribution that may be due or any accounting liability.
The estimated percentage in relation to Knights Professional Services Limited as at 30 April 2025 is 0.9554%.
This approach enables each employer to calculate the extent of their obligation to the Section on the basis of the funding level at any time. Cheviot will publish funding updates on the website: quarterly, on the scheme funding basis, which includes an allowance for future investment returns; and annually, on an estimated buyout basis, which looks at the position should all benefits be secured with an external provider.
Estimated funding position as at 30 April:
|
|
Scheme funding basis
|
|
|
|
30 April 2025 |
30 April 2024 |
|
|
£'000 |
£'000 |
|
Total assets |
52,500 |
58,300 |
|
Total liabilities excluding expenses |
(57,200) |
(63,000) |
|
Deficit |
(4,700) |
(4,700) |
|
Funding level |
92% |
93% |
Information provided as at 30 April 2025 is at 31 March 2025, the latest information available. This is not expected to be materially different from the 30 April 2025 position.
Allocation to the Group
The estimated share of the Scheme liabilities is 0.9554%.
Over the year to 30 April 2025, the Section's funding position is a small deficit.
|
|
30 April 2025 |
30 April 2024 |
|
|
£'000 |
£'000 |
|
Estimated cost of providing benefits |
(546) |
(498) |
|
Value of assets |
502 |
461 |
|
Resulting deficit |
(44) |
(37) |
|
Funding level |
92% |
93% |
The deficit has not been recognised as management consider this to be temporary and not material.
The Trustee continues to monitor the funding position.
The Trustee reserves the right to withdraw, replace or amend the policy for the allocation between employers in the future.
42. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its other related parties are disclosed below.
KPV Propco Ltd is a company controlled by Mr D.A. Beech, a person with significant influence over the Group and a member of key management personnel.
The Group leases a property from KPV Propco Ltd. During the year rents of £606,000 (2024: £376,000) were charged by KPV Propco Ltd to the Group. A new lease of The Brampton, Newcastle-under-Lyme was granted for a term of 25 years from and including 9 December 2024 to 8 December 2049 at a current rent of £801,000 per annum (excluding VAT).
During the year Knights Professional Services Limited charged KPV Propco Ltd for professional services totalling £8,000 (2024: £145,000) and a management fee of £20,000 (2024: £40,000). At 30 April 2025, there was an amount of £nil owed by the Group to KPV Propco Ltd (2024: £24,000).
During the year Knights Professional Services Limited provided legal services to the Directors in an individual capacity of £2,000 (2024: £10,000). At 30 April 2025, there was an amount of £nil (2024: £nil) owed to the Group from the Directors.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Short-term employee benefits and social security costs |
1,739 |
1,338 |
|
Pension costs |
37 |
20 |
|
Share-based payments |
182 |
(23) |
|
|
1,958 |
1,335 |
Key management personnel includes Board members and directors of the Group and the main trading company Knights Professional Services Limited.
Transactions with directors
Dividends totalling £868,000 (2024: £789,000) were paid in the year in respect of ordinary shares held by the Company's directors.
43. Post balance sheet events
On 2 May 2025 the Group exchanged contracts to acquire Birkett Long LLP and Birkett Long IFA (collectively trading as Birkett Long). The Group will acquire Birkett Long for total consideration of £16.6m. The transaction completed on 13 June 2025 and all assets and liabilities of Birkett Long LLP were hived into the Group on that date.
On 30 June 2025 the Group exchanged contracts to acquire Rix & Kay LLP. The Group will acquire Rix & Kay LLP for a total consideration of £0.87m. The transaction completed on 1 August 2025 and all assets and liabilities of Rix & Kay LLP were hived into the Group on that date.
On 18 July 2025 the group disposed of the crime business, acquired as part of the IBB Law LLP acquisition in April 2025.
On 15 August 2025 the Group completed the acquisition of Le Gros Solicitors Limited for a total consideration of £0.5m. All assets and liabilities of Le Gros were hived up to the Group on that date.
Initial accounting for the business combination is not yet complete and the fair value of net assets acquired has not yet been determined; accordingly details of the assets acquired and liabilities assumed, and goodwill arising on the acquisitions, cannot be given.
44. Basis of preparation
The financial information set out in this preliminary announcement does not constitute the Group's statutory financial statements for the years ended 30 April 2025 or 30 April 2024. The financial information has been extracted from the Group's statutory financial statements for the year ended 30 April 2025. The auditors have reported on those financial statements; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 30 April 2025 will be filed with the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ended 30 April 2024 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was also unqualified, and also did not contain a statement under section 498(2) or (3) of the Act.
Glossary of Terms
Financial Performance Measure
Underlying EBITDA
Underlying EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group excluding the effects of depreciation, amortisation, and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Operating profit |
18,600 |
19,962 |
|
Depreciation and amortisation charges (note 11) |
12,873 |
12,090 |
|
Non-underlying operating costs (note 13) |
11,455 |
6,630 |
|
Underlying EBITDA |
42,928 |
38,682 |
|
Depreciation of right of use assets |
(5,223) |
(5,607) |
|
Interest on leases |
(2,312) |
(1,537) |
|
Lease interest receivable |
63 |
66 |
|
Underlying EBITDA post IFRS 16 |
35,456 |
31,604 |
Underlying EBITDA post IFRS 16 is used as a metric as this reflects the profits after deduction of rental costs which is most comparable to the EBITDA reported at IPO, before the introduction of IFRS 16.
Underlying Profit Before Tax (PBT)
Underlying PBT is presented as an alternative performance measure to show the underlying performance of the Group excluding the effects of amortisation on acquired intangible assets, and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Profit before tax |
12,269 |
14,831 |
|
Amortisation on acquired intangibles (note 11) |
4,033 |
3,580 |
|
Non-underlying operating costs (note 13) |
11,455 |
6,630 |
|
Non-underlying finance costs (note 13) |
246 |
281 |
|
Underlying profit before tax |
28,003 |
25,322 |
|
|
|
|
Underlying Operating Profit to Underlying Profit After Tax (PAT)
Underlying PAT is presented as an alternative performance measure to show the underlying performance of the Group excluding the effects of investment income, finance costs and income.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Operating profit before non-underlying charges |
34,088 |
30,172 |
|
Investment income (note 22) |
58 |
- |
|
Finance costs (note 14) |
(6,445) |
(4,939) |
|
Finance income (note 15) |
302 |
89 |
|
Underlying profit before tax |
28,003 |
25,322 |
|
Taxation |
(7,448) |
(6,598) |
|
Underlying profit after tax |
20,555 |
18,724 |
Underlying Profit After Tax (PAT) and Underlying Earnings per Share (EPS)
Underlying PAT and underlying EPS are presented as alternative performance measures to show the underlying performance of the Group excluding the effects of amortisation on acquired intangible assets and non-underlying items.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Profit after tax |
7,576 |
9,847 |
|
Amortisation on acquired intangibles (note 11) |
4,033 |
3,580 |
|
Non-underlying costs (note 13) |
11,701 |
6,911 |
|
Tax impact of non-underlying costs (note 17) |
(2,755) |
(1,614) |
|
Underlying profit after tax |
20,555 |
18,724 |
|
|
|
|
|
Underlying earnings per share |
Pence |
Pence |
|
Basic underlying earnings per share |
23.59 |
21.81 |
|
Diluted underlying earnings per share |
22.88 |
21.13 |
Free Cash Flow and Cash Conversion %
Free cash flow measures the Group's underlying cash generation.
Cash conversion % measures the Group's conversion of its underlying PAT into free cash flows. Free cash flow is calculated as the total of net cash from operating activities after adjusting for tax paid and the impact of IFRS 16 cash flows. Cash conversion % is calculated by dividing free cash flow by underlying profit after tax, which is reconciled to profit after tax above.
|
|
Year ended 30 April 2025 £'000 |
Year ended 30 April 2024 £'000 |
|
Cash generated from operations (note 37) |
39,011 |
36,254 |
|
Tax paid |
(5,820) |
(5,432) |
|
Total cash outflow for IFRS 16 leases |
(6,515) |
(6,245) |
|
Free cashflow |
26,676 |
24,577 |
|
Underlying profit after tax |
20,555 |
18,724 |
|
Cash conversion (%) |
130% |
131% |
Net debt
Net debt is presented as an alternative performance measure to show the net position of the Group after taking account of bank borrowings and cash at bank and in hand.
|
|
30 April 2025 |
30 April 2024 |
|
|
£'000 |
£'000 |
|
Borrowings (note 31) |
70,682 |
40,617 |
|
Cash and cash equivalents |
(5,853) |
(5,453) |
|
Net debt |
64,829 |
35,164 |
Working Capital
Working capital is calculated as:
|
|
30 April 2025 £'000
|
30 April 2024 £'000
|
|
Current assets |
|
|
|
Contract assets |
50,998 |
40,191 |
|
Trade and other receivables |
39,552 |
32,753 |
|
Corporation tax receivable |
882 |
304 |
|
Total current assets |
91,432 |
73,248 |
|
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(26,662) |
(19,935) |
|
Contract liabilities |
(130) |
(188) |
|
Total current liabilities |
(26,792) |
(20,123) |
|
Net working capital |
64,640 |
53,125 |
Other Definitions
Churn is calculated based on the number of qualified fee earners who had been employed by the Group for more than one year. Churn is calculated taking the number of leavers in the above group over the financial year as a percentage of the average number of colleagues for the year. Retention is 100% less the churn rate. Churn excludes expected churn from acquisitions.
Fee Earner Concentration
This is calculated taking the largest fees allocated to an individual fee earner as a percentage of the total turnover for the year and demonstrates the Group's reliance on the fee earning potential of an individual fee earner.
Client Concentration
On an individual basis this is calculated as the percentage of total turnover for the financial year that arises from fees of the largest client. For the top 10 client concentration calculation this takes the fee income from the 10 largest clients for the year as a percentage of the total turnover for the year.
Top 50 clients
Based on fee income from the 50 largest clients for the year, excluding CL Medilaw and one off transactions.
Client Satisfaction
Net Promoter Score (NPS) measures the loyalty of a client to a company and can be used to gauge client satisfaction. NPS scores are measured with a single question survey and reported with a number from -100 to +100, the higher the score, the higher the client loyalty/satisfaction.
Colleague Satisfaction
Employee Net Promoter Score (ENPS) measures the loyalty of employees to a company and how likely they are to recommend their employer as a place to work, which can also be used to gauge employee satisfaction. ENPS scores are measured with a single question survey and reported with a number from -100 to +100, the higher the score the higher the employee loyalty.
Fee Earners
When referring to the number of fee earners in the Group we include all individuals working in the Group on a mainly fee earning basis. This includes professionals (legal and non-legal) of all levels including paralegals, trainees and legal assistants. When referring to the number of fee earners in the business this will refer to the absolute number of individuals working in the Group. When using the number of fee earners to calculate the average fees or profit per fee earner or the ratio of fee earners to support staff these calculations are based on the number of full-time equivalent (FTE) individuals to reflect that a number of individuals choose to work on a part-time basis.
Non-Fee Earners/Support Staff
This includes all employees that are not fee earning.
Recurring Revenue
This is calculated based on the amount of revenue in a year that reoccurs in the following year from the same clients.
Lock Up
This is calculated as the combined debtor and WIP days as at a point in time. Debtor days are calculated on a count back basis using the gross debtors at the period end and compared with the total fees raised over prior months. WIP (work in progress) days are calculated based on the gross work in progress (excluding that relating to clinical negligence claims, insolvency, highways and real estate investment as these matters operate on a mainly conditional fee arrangement and a different profile to the rest of the business) and calculating how many days billing this relates to, based on average fees (again excluding clinical negligence, highways and real estate investment fees) per month for the last 3 months.
Lock up days excludes the impact of acquisitions in the last quarter of the financial year.
Organic Growth
Organic growth excludes revenue growth from acquisitions in the year of their acquisition, and for the first full financial year following acquisition, based on the fees generated by the individuals joining the Group from the acquired entity. Recruitment of individuals into the acquired offices post acquisition is treated as part of the organic growth of the business.
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