Full Year Results
Summary by AI BETAClose X
Knights Group Holdings plc
("Knights" or the "Group")
Full Year Results
Strong organic growth and performance driven by differentiated model and proven strategy
Knights, the national legal and professional services business, today announces its full year results for the year ended 30 April 2026.
Financial highlights
· Underlying revenue1 increased 28% to £207.7m (FY25: £162.0m)
· Organic growth increased to 7% (FY25: -0.3%), including 12% organic growth in the second half
· Underlying EBITDA2 increased by 20% to £51.5m (FY25: £42.9m)
· Underlying PBT2 up 19% to £33.2m (FY25: £28.0m)
· Underlying basic EPS3 increased by 17% to 28.14p per share (FY25: 23.95p)
· Reported PBT of £10.2m (FY25: £12.3m) reflects an increase in primarily acquisition related non-underlying costs
· Debtor days4 of 30 (FY25: 31) and lock up4 days of 84 (FY25: 86) demonstrate continued working capital discipline
· Excellent cash conversion5 of 163% (FY25:130%)
· Net debt6 maintained at £65.4m (FY25: £64.8m) after c.£17m of acquisition related payments; Net debt / EBITDA banking covenant ratio of 1.5x (30 April 2025: 1.6x)
· Final dividend of 3.69p, giving a 17% increase in the total dividend for the year to 5.63p (FY25: 4.81p)
Strategic and operational highlights
Driving organic growth through a focus on nurturing talent and expanding our capabilities
· Selective hiring of experienced professionals with strong client followings and networks
· Maintained industry low annual churn7 of 10%; high eNPS score of +46
· Expanded specialisms in Tax, ESG, Competition, Regulatory, Sport and Agriculture and grew our footprint by organically establishing a presence in Cardiff
Successful acquisitions expanding our network and access to talent pools in key markets
· Further expansion in the South East, with the acquisitions of Birkett Long and Rix & Kay
· Accelerated expansion in Cardiff with the acquisition of real estate boutique, Le Gros Solicitors
· Increasingly recognised as an attractive consolidator in a market shifting beyond traditional ownership models and where scale and financial strength are becoming more important
A scalable platform, harnessing technology to enable growth and competitive advantage
· Continued to build on corporate model with unified technology, centralised business services, and experienced management team in place to enable growth and to scale consistently
· With a security-first approach to AI, we have implemented our own tools for client onboarding, workflow management and offboarding, expanded our data insights, and are building on this platform to support client contracting and billing
Current trading and outlook
· Positive start to the year; look forward to delivering continued organic growth, complemented by value-enhancing acquisitions
· Continued investment in the business has strengthened our ability to take advantage of opportunities in our fast growing and structurally changing regional segment of the UK legal sector
· Renewed and extended our revolving credit facility to £159m from £100m, committed until July 2029, providing the flexibility to continue to pursue our growth strategy
David Beech, CEO of Knights, commented:
''I am pleased to report that we grew revenues by 28% year on year, doubling them over the last five years. We also maintained strong underlying PBT margins while investing in strengthening our operational platform.
Our unified technology approach, centralised business services support, and expanded, experienced management team will facilitate the use of technology and drive operational gearing as we grow. At the same time, our continued cash discipline has seen us deliver reduced work in progress4 and debtor days4, enabling us to grow and invest without a material increase in debt.
We delivered a strong performance in the year, with double digit organic growth in the second half, contributions from recent acquisitions, and good cash generation assisting the self-funding of acquisition costs in the year.
Our continued investment in the business has strengthened our ability to take advantage of opportunities in our growing and structurally changing regional segment of the UK legal sector.
Having made a positive start to the current financial year, we look forward to delivering continued organic growth, complemented by our value enhancing acquisition strategy, in the current year and beyond.''
Footnotes
1 Underlying revenue excludes the Crime business which was acquired with IBB Law (completed on 4 April 2025). This business was non-core, as stated at the time of the acquisition, and we completed its sale on 18 July 2025. The business generated revenue of £0.2m and a loss before tax of £0.6m in the period. The related non-underlying employee costs of £0.5m and operating costs of £0.3m are excluded from the underlying costs of the Group.
2 Underlying EBITDA excludes non-underlying revenue and operating expenses including transaction and onerous lease expenses in relation to acquisitions, 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. Underlying PBT also excludes amortisation of acquired intangibles, non-underlying finance costs, disposals of acquired assets and gain on disposal of a customer list from an acquired business.
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.
3 Underlying EPS is underlying PAT divided by the weighted average number of ordinary shares in issue.
4 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 invoicing 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.
5 Underlying cash conversion is calculated as the total of cash from underlying operations, less underlying tax paid and underlying IFRS 16 net lease payments, divided by underlying profit after tax.
6 Net debt includes cash and cash equivalents, borrowings and acquired debt but excludes lease liabilities.
7 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, redundancies and retirements. Retention is 100% less the churn rate.
These footnotes apply throughout the RNS
A presentation of the results will be made to analysts and investors at 9.00am this morning. To register for access, or for any other enquiries, please contact MHP Group on: Knights@mhpgroup.com.
Enquiries:
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Knights |
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David Beech, CEO Kate Lewis, CFO James Sheridan, Investor Relations |
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 |
knights@mhpgroup.com |
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. It has specialists in all key areas of Business and Private Wealth services. It is focussed on key UK markets outside London and currently operates from 29 offices located in Beaconsfield, Birmingham, Brighton, Bristol, Cardiff, Carlisle, Chelmsford, Cheltenham, Chester, Colchester, Exeter, Kings Hill, Leeds, Leicester, Lincoln, Manchester, Newcastle, Nottingham, Oxford, Portsmouth, Reading, Sheffield, Stoke, Teesside, Uxbridge, Weybridge, Wilmslow, Worcester and York.
Chairman's statement
I am pleased to present Knights' results for FY26, in which we delivered a strong performance for the year, supported by strong second half organic growth combined with contributions from successful acquisitions. Knights' differentiated business model, together with its scale, clear focus on premium service, continued investment in future capability and a strengthened and mature leadership team, reinforced our position as a leading provider of legal and professional services delivered by talented professionals across the UK regions.
The Group increased full year underlying revenue1 by 28% to £207.7 million, and underlying profit before tax2 increased by 19% to £33.2 million. Organic growth strengthened materially during the year, reflecting our long-term focus on recruiting and retaining the highest-calibre professionals, geographic and service line expansion, and pricing discipline. This performance demonstrates not only the fundamental quality of our platform, but also the consistency of our strategic execution.
A proven strategy, delivering results
During the year, we continued to execute our proven strategy, supported by a more established management team and a centralised business support platform. We strengthened the business through selective acquisitions and targeted investment to support long-term growth. Together, these developments leave Knights well placed to expand its market position and continue to capture opportunities as structural changes in our market accelerate.
Investment in technology and operations was a strategic priority. We enhanced the infrastructure and resources that support both colleagues and clients, taking a measured approach to embracing developments in AI while maintaining discipline regarding risk, security and compliance. This investment will improve both efficiency and resilience, and support even higher quality service delivery while ensuring we are equipped fully for future demands in an ever-changing environment.
We added further scale through acquisitions, strengthening our presence in key markets and broadening the Group's platform. Acquisitions during the period included Rix & Kay as part of our South East expansion, creating additional value from our existing footprint by moving new colleagues into established Knights offices; Birkett Long, which not only gave Knights an entry point into Essex but also added a financial planning platform, a complementary service line that has long been of strategic interest; and finally, the acquisition of Le Gros, which accelerated the growth of our organically established Cardiff office. All are performing well, demonstrating the effectiveness of our approach to selection, integration and value creation. The pipeline of opportunities is encouraging and Knights' reputation as an attractive home for businesses, combined with its established in-house capability and financial discipline, means it is well placed to pursue its value-enhancing acquisition strategy.
Culture and talent
Culture remains an important driver of progress. With a well-embedded management team in place, including strong regional leadership, as well as newly created roles including a Chief Technology Officer, we are combining entrepreneurial energy with operational discipline while preserving the collaborative environment that defines Knights. This remains central to our ability to attract, develop and retain talented professionals, and to build a future-proofed business.
Dividend
The Board proposes a final dividend of 3.69p per share, which, along with the interim dividend of 1.94p per share, totals a 5.63p dividend for the year, a 17% increase from FY25's 4.81p. The dividend is scheduled for payment on 9 October 2026 to shareholders recorded on 11 September 2026, pending shareholder approval at the Group's AGM. The Group's dividend policy remains to distribute c.20% of underlying profit after tax, balancing profit retention for investment and growth with shareholder returns.
Summary
On behalf of the Board, I would like to welcome all our new colleagues who have joined during the year, thank all at Knights for the hard work that has resulted in this strong performance, and our clients and shareholders for their continued support.
The progress made across the Group during the year gives us confidence in the future. With a strong platform and clear strategic direction, and a strong balance sheet, Knights is well positioned to continue building scale, strengthening its market position and delivering sustainable, profitable growth.
Chief Executive's review
As one of the first in our sector to corporatise in 2012, Knights has been investing in and building our platform for 14 years. Today, we bring unmatched premium, diversified specialist services from a connected national team to clients across the UK. From this established, scalable platform, we are well positioned to continue with our growth strategy. We are doing this both organically, by attracting and retaining high calibre talent, and through acquisitions, and we are now recognised as a leading consolidator in our sector at a time when having the scale to effectively harness technology is more important than ever.
The benefits of our differentiated model are demonstrated in our results, with double-digit organic growth in the second half coupled with strong performances from recent acquisitions. Through these, we have established a strong footprint in the affluent South East and taken our organic expansion beyond England for the first time, to Cardiff.
While we grew revenues by 28% year on year, doubling them over the last five years, and maintained strong underlying PBT2 margins, we also invested in strengthening our platform. Our unified technology approach, centralised business services support, and expanded, experienced management team will facilitate operational gearing as we grow. At the same time, our continued cash discipline has seen us deliver reduced work in progress (WIP) and debtor days4, enabling us to grow and invest without a material increase in debt.
The Group is in a good position to grow organically, as we select the best talent from wider pools across our expanded network, and by acquisition, as we select the best fit from the healthiest pipeline of opportunities we have seen for some time. Our strong cash generation, reduced leverage and recently increased revolving credit facility provide flexibility to take advantage of these opportunities.
A strong financial performance
The Group delivered a strong performance, with a 28% increase in full year underlying revenue1 to £207.7m (FY25: £162.0m) underpinned by organic revenue growth of 7% (FY25: -0.3%), reflecting a significant improvement in the second half to organic growth of 12%. Underlying EBITDA2 increased by 20% to £51.5m (FY25: £42.9m) with underlying PBT2 increasing by 19% to £33.2m (FY25: £28.0m), as we absorbed higher national insurance payments, the impact of interest rate movements, as well as investing in the business and technology.
The Group maintained its tight management of working capital throughout the year, with record low debtor days4 of 30 (FY25: 31 days) and WIP days4 of 54 (FY25: 55 days) at 30 April 2026.
Our strong underlying cash conversion enabled us to maintain a robust balance sheet position, with net debt6 of £65.4m at year end (FY25: £64.8m), after c.£17m of net cash paid in relation to acquisitions.
Driving organic growth through a focus on high calibre, senior talent
A key driver of our return to organic growth has been the quality of our people, as we have hired more selectively and retained experienced professionals with high quality client followings and networks. This year, we recruited 39 new senior recruits and maintained low annual churn7 at 10%. Our increased focus on helping new colleagues to onboard clients to drive profitable growth has supported an increase in fees per fee earner and new joiners reaching 'run-rate' revenue sooner.
Knights' national scale and brand strength, its market-leading resources, location network and expertise in the UK regions, as well as its unique collaborative culture, are attracting high calibre professionals. Lower churn has been maintained as we have matured the leadership and support for our people. This includes facilitating better connectivity, collaboration and engagement by our CEO, management team, Client Services Directors and Business Services Directors working together as one team. As well as supporting a high employee net promoter score (eNPS), of +46, this is also creating greater opportunities for growth.
We also maintain a focus on pricing, ensuring it reflects the value of our services and market positioning through regular reviews of our rates and training our professionals.
In addition, we have expanded our capabilities and footprint organically by adding to our range of service lines and specialisms in areas such as Tax, ESG, Competition, Regulatory, Sport and Agriculture, and by entering Cardiff, which was a move facilitated by the strength of our brand reputation and presence in adjacent regions.
Successful acquisitions expanding our network and talent pool
Building on a track record of 29 acquisitions over 14 years, we continue to successfully execute our strategy of making selective earnings accretive acquisitions to expand our expertise or geographical reach, or grow our teams in existing locations.
Having identified the South East of England as a priority for expansion, given its affluent client base and a talent pool attracted by opportunities at a premium firm - without a central London commute - we first entered the region in 2020. In June 2025 we completed the acquisition of Birkett Long LLP, a high-quality full service legal firm, and Birkett Long IFA LLP, a financial planning platform from which to grow this complementary service. In August 2025 we acquired Rix & Kay LLP, a prominent regional law firm, with new colleagues joining our existing teams in Kent and Sussex. Together with our previous acquisitions in the area, these additions have demonstrated that bringing Knights' modern, differentiated model to new regions provides a real stimulus for growth. We have continued to expand our teams across the region through recruitment. In August 2025, we accelerated the growth of our organically established presence in Cardiff, through the acquisition of real estate boutique, Le Gros Solicitors Limited.
Following the acquisition of Thursfields in September 2024, which significantly strengthened the Group's presence in the West Midlands, in May 2025, Knights brought its colleagues from Worcester and Kidderminster together in one premium space from which to offer more diversified services to clients.
All recent acquisitions have performed well and are driving further growth through collaboration with existing colleagues and new recruits from expanded talent pools.
The Group continues to actively assess further acquisition opportunities, with a healthy pipeline across geographies targeted for expansion, as well as bolt-ons where we can leverage existing locations.
We continue to progress the previously announced discussions with Moore Barlow LLP.
Well positioned in a growing market segment experiencing accelerating structural change
Having grown in size and capability from a single UK region to bring diverse, highly specialised services across wider regional UK markets, Knights is well positioned to capitalise on its market opportunity in our growing and structurally changing regional segment of the UK legal sector.
The sector is seeing an increasing shift in ownership models and business strategies beyond traditional partnership. Having pioneered the adoption of a corporate model in 2012, we have the advantage of more than a decade of reinvesting profits in our management structure, centralised business services, systems and technology, enabling a collaborative national team focussed on delivering high quality client services.
With unmatched understanding of a unique sector, and the depth of experience to apply a well-developed methodology to assessing, valuing and integrating businesses, Knights is increasingly recognised as a leading consolidator and an attractive exit option in a market which has seen rising interest from private equity. Our in-house capability to execute acquisitions, combined with the flexibility of our funding, positions us well to capture the opportunities to buy high quality regional law firms, against a favourable industry backdrop.
Set to scale, harnessing technology
We operate a mature corporate structure, with Knights built on a well-developed scalable platform. This includes unified technology, centralised business services support, and an experienced management team working in lockstep to enable agile decision-making.
This structure not only supports effective client service delivery across our regional network, but also underpins our ability to harness technology and mine insights consistently across the business, a key enabler of growth, and our ability to scale up and outcompete our market:
· Grow: Experienced colleagues are freed up to deliver better service and spend more time on higher value advisory work, whilst collaboration across the business generates greater growth opportunities
· Scale: Enables high standards to be applied consistently across the business and the automatic transfer of data from acquisitions, making us more scalable without adding manual roles
· Outcompete: Widens the gap between Knights and independent firms which don't have the scale or resources to invest in technology, with a single platform that allows us to rapidly implement change
We implemented a new advanced document management system in the first half, having migrated all documents to the cloud. Since then, we have continued to expand our technology team and made significant progress under the leadership of our new Chief Technology Officer who was appointed in June 2025. We have developed and launched a user interface which significantly speeds up client onboarding, workflow management and offboarding, whilst expanding our data insights, and we are building on this platform to support client contracting and invoicing. We are taking a measured, security-first approach to AI, developing our own, domain-specific secure tools to augment our platforms and processes, rather than relying on off-the-shelf, open access and generic AI models.
This progress provides a firm foundation from which we can roll out further functionality within our own system. This will better meet our requirement of having one, integrated platform, with development costs mainly expected to be offset by cost savings, primarily from replacing third party software providers.
Summary and outlook
We delivered a strong performance in the year, with double-digit organic growth in the second half, contributions from recent acquisitions, and good cash generation assisting the self-funding of acquisition costs in the year.
Our continued investment in the business has strengthened our ability to take advantage of opportunities in our growing and structurally changing regional segment of the UK legal sector.
Having made a positive start to the current financial year, we look forward to delivering continued organic growth, complemented by our value enhancing acquisition strategy in the current year and beyond.
CFO review
Excellent financial discipline and cash management alongside strong revenue and profit growth
I am pleased to report a year of strong, profitable, cash generative growth with underlying revenue1 of £207.7m, an increase of 28% from the prior year (FY25: £162.0m) including 7.1% organic growth. Underlying EBITDA2 has increased 20% to £51.5m in the current year (FY25: £42.9m).
Reported profit before tax (PBT) fell to £10.2m in the year (FY25: £12.3m) due to higher non-underlying costs mainly related to the increased consideration payments on acquisitions and other acquisition related costs.
Our continued strong discipline in financial management and cash collection has generated excellent underlying cash conversion5 of 163% for the year (FY25: 130%).
Underlying financial results
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Year ended 30 April 2026
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Year ended 30 April 2025
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% change
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|
Revenue |
207,729 |
161,966 |
28% |
|
Other operating income |
10,775 |
9,649 |
12% |
|
Employee costs |
(126,266) |
(97,607) |
29% |
|
Impairment of trade receivables and contract assets |
(1,477) |
(1,241) |
19% |
|
Other operating charges |
(39,264) |
(29,839) |
32% |
|
Underlying EBITDA2 |
51,497 |
42,928 |
20% |
|
Underlying EBITDA % |
24.8% |
26.5% |
|
|
Depreciation charges under IFRS 16 |
(5,761) |
(5,223) |
10% |
|
Finance costs under IFRS 16 |
(2,946) |
(2,249) |
31% |
|
Underlying EBITDA post IFRS 16 charges |
42,790 |
35,456 |
21% |
|
Depreciation and amortisation charges (excluding amortisation on acquired intangibles) |
(4,938) |
(3,617) |
37% |
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Share of results of joint ventures |
795 |
58 |
1271% |
|
Underlying finance charges (excluding IFRS 16) |
(5,523) |
(4,133) |
34% |
|
Underlying finance income |
30 |
239 |
(87%) |
|
Underlying profit before tax |
33,154 |
28,003 |
18% |
|
Underlying profit before tax margin |
16.0% |
17.3% |
|
|
Underlying tax charge |
(8,486) |
(7,448) |
14% |
|
Underlying profit after tax2 |
24,668 |
20,555 |
20% |
|
Basic underlying EPS (pence) 3 |
28.14 |
23.95 |
17% |
Revenue
Reported underlying revenue1 for the year is £207.7m compared to £162.0m in FY25, an increase of 28%.
Of this total increase of £45.7m, £18.6m related to acquisitions completed during the year and £16.5m reflected the full year impact of acquisitions completed in FY25. All acquisitions completed in FY25 and FY26 are fully integrated and performing well.
The remaining £10.6m increase in revenues from FY25 to FY26 has been driven by organic growth. In the first half of the year we reported a return to organic growth of 2.6%. During the second half of the year organic growth accelerated to 11.8% resulting in overall 7.1% organic growth for the year.
Organic growth has been driven by a continued focus on premium work with recruitment of high calibre partners bringing a high quality client following. All of these factors have driven increases in pricing and productivity resulting in strong organic growth for the year.
Despite the continued soft macro-economic environment, all areas of the business have grown organically during the year with particularly strong growth in our private individual service lines as well as our volume remortgage business, Integrar.
Employee costs
Total underlying employee costs of £126.3m (FY25: £97.6m) have increased as a percentage of revenue to 60.8% (FY25: 60.3%) reflecting an increase in payroll taxes of c.£1.8m in the period. In the second half of the year, we have strategically reduced certain areas of recruitment as we continue to develop the technology around our processes and systems to increase efficiencies.
We have continued to invest in our business support capability and our management team to ensure we have a strong business services platform and leadership structure. During the year we have recruited a Chief Technology Officer, added five new Client Service Directors and invested in our Knowledge team to support our future growth whilst continuing to maximise opportunities to drive efficiencies in internal processes.
Other operating income
Although the value of other operating income has increased by £1.2m to £10.8m (FY25: £9.6m), as a percentage of revenue it has decreased from 5.9% in FY25 to 5.2% in FY26 as a result of lower interest rates. The absolute increase in other operating income is primarily due to increased interest received (net of monies paid out to clients) due to more client monies being held as a result of higher levels of activity and acquisitions.
Other operating charges
Other operating charges of £39.3m (FY25: £29.8m) have increased to 18.9% of revenue compared to 18.4% in FY25. Costs have increased to support the delivery of increased revenues and acquisitions in the year. While we have been able to leverage costs in certain areas as we centralise and consolidate acquired supplier contracts, we have continued to invest in AI and technology, increasing our costs by c.£1m in the year. In FY27, further revenue growth should enable us to leverage our existing cost base as we continue to invest in technology platforms for our Business Services teams while maintaining margins.
Underlying EBITDA2
During the year underlying EBITDA increased by £8.6m to £51.5m (FY25: £42.9m). Underlying EBITDA margin has decreased to 24.8% (FY25: 26.5%). The 1.7% reduction in EBITDA margin is explained as follows: increased costs due to higher payroll taxes (employer national insurance contributions) - 0.9%; reduction in client interest income - 0.8%; and investment in enhanced technology and AI spend - 0.5%. These reductions in margin were offset by efficiencies in other areas such as administration and other employee costs amounting to 0.5%.
Underlying EBITDA excludes non-underlying income and operating costs. Non-underlying operating costs include transaction and onerous lease expenses mainly relating to acquisitions, contingent consideration and one-off restructuring and professional costs incurred mainly as a result of streamlining support services in relation to acquisitions. The Board considers this a key metric to measure underlying business performance.
Contingent acquisition payments are treated as a non-underlying expenses as these represent payments for acquisitions which are dependent on the continued employment of certain individuals in the business for an agreed period of up to three years after acquisition to preserve the goodwill and client relationships. Accounting standards require these arrangements to be treated as remuneration in the Statement of Comprehensive Income. However, the individuals also receive market rate salaries and therefore, if not separately identified, these payments would significantly distort the results reported.
IFRS 16 depreciation and finance charges
The IFRS 16 depreciation and finance charges reflect the accounting charges in respect of all leases with a term of over one year. Although total costs in the year increased to £8.7m (FY25: £7.5m) due mainly to acquired properties, our focus on managing our property portfolio to leverage costs, as well as organic growth in existing offices, resulted in the costs as a percentage of revenue reducing to 4.2% (FY25: 4.6%).
Depreciation and amortisation charges
The depreciation and amortisation charge for the year has increased to £4.9m (2.4% of revenue) compared to £3.6m (2.2% of revenue) in FY25 due to continued investment in technology and property to support the growth of the business.
Share of results of joint ventures
The share of results of joint ventures of £0.8m in the period represents the share of net assets receivable from the Group's joint venture with Convex Corporate Finance Limited.
Finance charges
Finance charges, excluding lease interest, increased by £1.4m to £5.5m in the year (FY25: £4.1m) because of higher average net debt balances during the year due to cash paid in respect of acquisitions.
Underlying finance income
Underlying finance income related to interest received on the loan to Convex. As the loan was fully repaid during the year, total income has reduced.
Underlying profit before tax (PBT)2
Underlying profit before tax does not include amortisation of acquired intangible assets, transaction expenses and onerous leases (mostly related to acquisitions), contingent payments for acquisitions, disposals of acquired assets, or one-time restructuring and professional fees largely incurred during the streamlining of support functions connected to acquisitions.
Underlying profit before tax also excludes profit on sale and the related transactions recognised in the year, relating to the sale of non-core areas of business acquired as part of recent acquisitions.
In July 2025, we sold the legal aid crime business acquired as part of the IBB acquisition. Our exit from this area of the business had been identified as part of the acquisition process. The business was disclosed as held for sale in the FY25 accounts. During FY26 the business generated income of £0.2m and a loss of £0.6m. This income and related costs are classified as non-underlying in the accounts. A £0.02m profit on disposal is also included within non-underlying transactions for the period.
As part of refocussing the financial planning business acquired with Birkett Long towards higher value work, we sold a book of clients to a third party enabling us to focus on providing a premium service to higher net worth individuals. Final proceeds are dependent on future income generated by the acquirer from the transferred clients. The accounts include a gain on disposal of the customer list of £1.1m within non-underlying transactions.
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 2026 |
Year ended 30 April 2025 |
|
Reported profit before tax |
10,237 |
12,269 |
|
Non-underlying revenue |
(247) |
- |
|
Amortisation on acquired intangibles |
5,270 |
4,033 |
|
Contingent acquisition payments treated as remuneration |
8,077 |
3,752 |
|
Other non-underlying costs |
9,817 |
7,949 |
|
Underlying profit before tax |
33,154 |
28,003 |
Total Group underlying PBT has increased by £5.2m to £33.2m (FY25: £28.0m).
The underlying profit before tax margin in the year decreased to 16.0% compared to 17.3% in FY25, primarily as a result of the reduction in underlying EBITDA margin of 1.7% (explained above) offset by the reduction in IFRS 16 charges as a percentage of revenue of 0.4%.
Reported profit before tax
Reported profit before tax for the year has reduced to £10.2m in the year (FY25: £12.3m) due to an increase in non-underlying costs during the year.
Non-underlying charges have increased due to an increase of £1.2m in amortisation on acquired intangibles, an increase of £4.3m in the charge to the Consolidated Statement of Comprehensive Income in relation to contingent payments treated as remuneration under IFRS (see above) as a result of larger acquisitions in the current and prior years, and an increase in other non-underlying costs due to higher transaction and onerous lease charges as a result of streamlining the cost base and operations of acquisitions.
Taxation
The effective rate of tax on the underlying profit for the year was 26% (FY25: 27%).
The total taxation charge for the year is £5.5m (FY25: £4.7m) made up of a current tax charge of £7.0m (FY25: £4.9m) partially offset by a deferred tax credit of £1.5m (FY25: £0.2m) giving an effective rate of tax of 54% (FY25: 38%). The increase in effective rate compared to the prior year and compared to the UK corporation tax rate of 25% is due to increased contingent acquisition payments, which are disallowable for corporation tax purposes.
Earnings per share (EPS)
Basic EPS in the period decreased by 39% to 5.40p per share (FY25: 8.83p per share) due to the reduction in reported profits driven by the increase in non-underlying costs as explained above.
The underlying EPS has increased by 17% to 28.14p per share for the year (FY25: 23.95p per share). The weighted average number of shares used to calculate the undiluted EPS in the year was 87,651,298.
Considering the dilutive impact of potential share options, the basic diluted EPS for the year is 5.21p per share (FY25: 8.43p per share). Underlying diluted EPS has increased by 19% to 27.12p per share (FY25: 22.88p per share).
Underlying EPS has been calculated, to aid comparison on a like for like basis, based on the underlying profit after tax, calculated as follows.
|
|
Year ended 30 April 2026
|
Year ended 30 April 2025
|
|
Operating profit before non-underlying charges and amortisation on acquired intangibles |
40,592 |
34,088 |
|
Non-underlying revenue |
(247) |
- |
|
Non-underlying staff costs |
453 |
- |
|
Share of results of joint ventures |
795 |
58 |
|
Finance costs |
(8,528) |
(6,445) |
|
Finance income |
89 |
302 |
|
Underlying profit before tax2 |
33,154 |
28,003 |
|
Taxation - underlying |
(8,486) |
(7,448) |
|
Underlying profit after tax |
24,668 |
20,555 |
Dividend
In line with the Group's progressive dividend policy, reflecting the improved underlying performance of the Group, balanced with the Board's strategy to continue to reinvest profit to support future growth plans, subject to approval at the Annual General Meeting in September 2026, the Board proposes a final dividend of 3.69p per share. This together with the interim dividend of 1.94p per share gives a total dividend in respect of the year of 5.63p per share (FY25: 4.81p per share) representing a 17% increase.
Balance Sheet
|
|
30 April 2026 |
30 April 2025 |
|
Goodwill and intangible assets |
112,224 |
105,873 |
|
Right-of-use assets |
42,149 |
46,635 |
|
Investment in joint venture |
820 |
111 |
|
Loan to joint venture |
- |
2,000 |
|
Property, plant and equipment |
25,355 |
23,685 |
|
Assets and liabilities held for sale |
137 |
394 |
|
Working capital |
62,498 |
64,640 |
|
Other provisions and deferred tax |
(20,124) |
(20,272) |
|
Lease liabilities net of lease receivables |
(50,011) |
(52,529) |
|
|
173,048 |
170,537 |
|
Cash and cash equivalents |
6,034 |
5,853 |
|
Borrowings |
(71,476) |
(70,682) |
|
Net debt6 |
(65,442) |
(64,829) |
|
Deferred consideration |
(2,500) |
(1,175) |
|
Net assets |
105,106 |
104,533 |
The Group's net assets as at 30 April 2026 increased by £0.6m to £105.1m (FY25: £104.5m) primarily due to the following key movements:
Goodwill and intangible assets increased by £6.4m during the year due to acquisitions completed in FY26 of £11.7m less amortisation in the period of £5.3m. The Board carries out an impairment review of goodwill and intangible assets each year to ensure the carrying value in the financial statements is supportable. The value in use was prudently calculated using a number of scenarios some of which had a more negative outcome than anticipated by the Directors. The Board was satisfied that all instances supported the assumption that the goodwill and intangible assets did not require impairment.
There is a net reduction of £2.0m in right of use assets net of lease liabilities as we continue to manage our property portfolio, exiting or surrendering excess space and downsizing larger acquired premises as appropriate.
Balances due from joint ventures reduced by £1.3m in the year primarily due to full repayment of a £2.0m loan during the year and the increase in investment value recognising our share of net assets due at the year end.
Property, plant and equipment increased by £1.7m in the year as we continued to invest in technology and refurbishing locations to provide the grade A systems and working environments to support our premium business.
Deferred consideration has increased by £1.3m during the year due to recognition of deferred consideration on acquisitions completed during the year.
The remaining £2.9m movement in net assets relates primarily to the reduction in working capital and increase in net debt explained in more detail below.
Working capital
Working capital is calculated as follows:
|
|
30 April 2026 |
30 April 2025 |
|
Contract assets |
54,264 |
50,998 |
|
Trade and other receivables |
43,622 |
39,552 |
|
Corporation tax receivable |
177 |
882 |
|
Total current assets |
98,063 |
91,432 |
|
Trade and other payables |
(35,440) |
(26,662) |
|
Contractual liabilities |
(125) |
(130) |
|
Total current liabilities |
(35,565) |
(26,792) |
|
Net working capital |
62,498 |
64,640 |
Net working capital has decreased to £62.5m as at 30 April 2026 (30 April 2025: £64.6m).
Trade and other payables increased by £8.8m during the year. The increase was mainly due to liabilities acquired of £3.1m together with an increase of £2.3m in contingent consideration accrued in the financial statements due to acquisitions in current and prior periods. The balance of the increase related to increased liabilities in line with the growth of the business and timing of other invoices.
Despite an absolute increase in the value of contract assets and trade and other receivables, driven by acquired assets and the larger scale of the business, the focus on financial management has reduced these balances as a percentage of revenue. Contract assets represented 26% of revenue as at 30 April 2026 (30 April 2025: 31%) whilst trade receivables and other receivables have reduced to 21% at 30 April 2026 (30 April 2025: 24%).
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 (WIP). The time taken to convert a unit of time incurred into cash is reported as the number of lock up days and is a KPI monitored by the Board, Client Services Directors and wider management team. As at 30 April 2026 lock up4 was 84 days (30 April 2025: 86 days), a reduction of 2 days and below 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, 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 up days. If WIP days were calculated including all valued WIP of the Group this would give WIP days of 82 and total lock up with no exclusions of 112 days as at 30 April 2026 (30 April 2025: 113 days).
Cash flow
Cash generation continues to be a key focus for the Board and management team. The Group measures cash by comparing the cash flow from underlying operations after tax as a percentage of its underlying profit after tax. As a result of the continued focus on this and specifically the management of lock up, the Group generated underlying cashflows before capital expenditure of £40.3m during the year equating to a cash conversion of 163% based on underlying profits.
|
|
Year ended 30 April 2026 |
Year ended 30 April 2025 |
|
Underlying EBITDA2 |
51,497 |
42,928 |
|
Change in working capital |
2,366 |
(5,121) |
|
Cash outflow for IFRS 16 leases |
(7,207) |
(6,515) |
|
Movement in underlying share-based payment charge |
1,310 |
1,195 |
|
Cash generated from underlying operations (pre-tax) |
47,966 |
32,487 |
|
Underlying tax paid |
(7,681) |
(5,820) |
|
Net cash generated from underlying operating activities |
40,285 |
26,667 |
|
Underlying profit after tax |
24,668 |
20,555 |
|
Underlying cash conversion5 |
163% |
130% |
The strong cash generation, driven by working capital management in the year has resulted in net debt of £65.4m at the year end (30 April 2025: £64.8m) despite a net cash outlay of c.£17m relating to acquisitions and disposals in the year together with deferred and contingent acquisition payments paid for acquisitions in prior years.
The table below shows a reconciliation of the key cashflows impacting the movement in net debt in the year.
|
|
Year ended 30 April 2026 |
|
Net debt 30 April 2025 |
64,829 |
|
Other net cash (inflows) from operating activities |
(40,365) |
|
Deferred and contingent acquisition payments |
6,451 |
|
Consideration paid for acquisitions in the year (including acquired debt and cash) |
12,168 |
|
Unpaid acquired debt |
69 |
|
Non-underlying costs paid and received (net of tax) |
9,042 |
|
Purchase of own shares |
1,220 |
|
Interest on borrowings |
5,529 |
|
Dividends paid |
4,258 |
|
Proceeds from strategic disposal of acquired assets |
(1,740) |
|
Joint venture loan capital and interest received |
(2,058) |
|
Capital expenditure (net of landlord contributions) |
6,039 |
|
Net debt 30 April 2026 |
65,442 |
As at 30 April 2026 net debt was £65m giving c.£35m headroom in the RCF at that time and well within all covenants. For banking purposes our leverage as at 30 April 2026 was 1.5 times EBITDA (as defined for covenant purposes).
On 3 July 2026 we renewed and extended our revolving credit facility (RCF) to £159m, committed until July 2029. Interest is payable on the loan at a margin of between 1.65% and 2.65% above SONIA dependent on leverage. Financial covenants remain broadly in line with the previous terms.
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
As anticipated the level of capital expenditure (net of landlord contributions) has reduced during the year to £6.0m (FY25: £12.1m). FY25 costs were unusually high due to the significant one-off refurbishment of our Stoke central hub at a cost of £5.8m. During FY26 we have continued to invest in our technology infrastructure and the refurbishment of existing and acquired office space as appropriate to ensure we provide colleagues with the correct technology resources and working environment to support the delivery of a premium service to clients.
Acquisitions
During the year we completed four acquisitions. The table below summarises the impact of these 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 |
Contingent and deferred acquisition payments |
Net cash impact of acquisitions pre year end |
|
2026 |
10.2 |
2.8 |
6.5 |
19.5 |
|
2027 |
- |
0.3 |
7.6 |
7.9 |
|
2028 |
- |
0.2 |
6.6 |
6.8 |
|
2029 |
- |
- |
2.4 |
2.4 |
The above includes estimated contingent acquisition payments treated as remuneration in the Consolidated Statement of Comprehensive Income.
Summary
FY26 has been a year of strong revenue growth, with positive contributions from acquisitions being supported by a return to organic growth of 7.1%. We have again delivered increased underlying profits whilst maintaining strong underlying profit margins. Despite the impact of external macroeconomic factors such as increased payroll taxes we have been able to continue to invest in technology and AI, property and our central services functions to future-proof our business and support anticipated growth.
Our continued excellent management of cash and the extension of our banking facilities gives us a strong balance sheet with sufficient headroom to facilitate our future growth.
For the year ended 30 April 2026
|
|
Note |
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Revenue - underlying* |
5 |
207,729 |
161,966 |
|
Non-underlying revenue |
5 |
247 |
- |
|
Total revenue |
|
207,976 |
161,966 |
|
Other operating income |
7 |
10,775 |
9,649 |
|
Staff costs - underlying* |
8 |
(126,266) |
(97,607) |
|
Non-underlying staff costs |
13 |
(453) |
- |
|
Total staff costs |
|
(126,719) |
(97,607) |
|
Depreciation and amortisation charges* |
11 |
(10,699) |
(8,840) |
|
Impairment of trade receivables and contract assets |
|
(1,477) |
(1,241) |
|
Other operating charges |
12 |
(39,264) |
(29,839) |
|
Operating profit before non-underlying charges and amortisation on acquired intangibles |
|
40,592 |
34,088 |
|
Amortisation on acquired intangibles |
11 |
(5,270) |
(4,033) |
|
Non-underlying operating costs |
13 |
(17,011) |
(11,455) |
|
Operating profit |
|
18,311 |
18,600 |
|
Share of results of joint ventures |
22 |
795 |
58 |
|
Finance costs* |
14 |
(8,528) |
(6,445) |
|
Finance income |
15 |
89 |
302 |
|
Non-underlying finance costs |
13 |
(430) |
(246) |
|
Net finance costs |
|
(8,869) |
(6,389) |
|
Profit before tax |
|
10,237 |
12,269 |
|
Taxation - underlying* |
17 |
(8,486) |
(7,448) |
|
Tax impact of non-underlying revenue |
17 |
(62) |
- |
|
Tax impact of non-underlying costs |
17 |
3,047 |
2,755 |
|
Taxation |
|
(5,501) |
(4,693) |
|
Profit and total comprehensive income for the year attributable to equity owners of the parent |
|
4,736 |
7,576 |
|
|
|
|
|
|
Earnings per share |
|
Pence |
Pence |
|
Basic earnings per share |
18 |
5.40 |
8.83 |
|
Diluted earnings per share |
18 |
5.21 |
8.43 |
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 2026
|
|
Note |
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
20 |
82,283 |
72,893 |
|
Intangible assets |
20 |
29,941 |
32,980 |
|
Investments |
22 |
820 |
111 |
|
Property, plant and equipment |
23 |
25,355 |
23,685 |
|
Right-of-use assets |
23 |
42,149 |
46,635 |
|
Finance lease receivables |
26 |
787 |
1,335 |
|
Trade and other receivables |
25 |
- |
2,000 |
|
|
|
181,335 |
179,639 |
|
Current assets |
|
|
|
|
Contract assets |
24 |
54,264 |
50,998 |
|
Trade and other receivables |
25 |
43,622 |
39,552 |
|
Finance lease receivables |
26 |
351 |
405 |
|
Corporation tax asset |
|
177 |
882 |
|
Cash and cash equivalents |
|
6,034 |
5,853 |
|
Assets held for sale |
27 |
137 |
1,283 |
|
|
|
104,585 |
98,973 |
|
Total assets |
|
285,920 |
278,612 |
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
Equity |
|
|
|
|
Share capital |
28 |
171 |
171 |
|
Share premium |
|
75,262 |
75,277 |
|
Other reserve |
29 |
(1,329) |
(576) |
|
Merger reserve |
|
(3,506) |
(3,506) |
|
Retained earnings |
|
34,508 |
33,167 |
|
Equity attributable to owners of the parent |
|
105,106 |
104,533 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Lease liabilities |
30 |
45,180 |
48,603 |
|
Borrowings |
31 |
71,226 |
69,807 |
|
Deferred consideration |
32 |
1,608 |
563 |
|
Deferred tax |
33 |
10,576 |
11,217 |
|
Provisions |
35 |
5,883 |
5,404 |
|
|
|
134,473 |
135,594 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Lease liabilities |
30 |
5,969 |
5,666 |
|
Borrowings |
31 |
250 |
875 |
|
Trade and other payables |
34 |
35,440 |
26,662 |
|
Deferred consideration |
32 |
892 |
612 |
|
Contract liabilities |
24 |
125 |
130 |
|
Provisions |
35 |
3,665 |
3,651 |
|
Liabilities held for sale |
27 |
- |
889 |
|
|
|
46,341 |
38,485 |
|
Total liabilities |
|
180,814 |
174,079 |
|
Total equity and liabilities |
|
285,920 |
278,612 |
The financial statements were approved by the Board and authorised for issue on 3 July 2026 and are signed on its behalf by:
Kate Lewis
Director Registered No. 11290101
Consolidated Statement of Changes in Equity
For the year ended 30 April 2026
|
|
Note |
Share capital |
Share premium |
Merger reserve |
Other reserve £'000 |
Retained earnings |
Total |
|
As at 1 May 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 from EBT |
|
- |
15 |
- |
22 |
- |
37 |
|
Dividends |
19 |
- |
- |
- |
- |
(3,903) |
(3,903) |
|
Balance at 30 April 2025 |
|
171 |
75,277 |
(3,506) |
(576) |
33,167 |
104,533 |
|
Profit for the period and total comprehensive income |
|
- |
- |
- |
- |
4,736 |
4,736 |
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
Credit to equity for equity-settled share-based payments |
9 |
- |
- |
- |
- |
1,315 |
1,315 |
|
Transfer between reserves |
29 |
- |
(15) |
- |
15 |
- |
- |
|
Purchase of own shares |
29 |
- |
- |
- |
(1,220) |
- |
(1,220) |
|
Issue of shares from EBT |
29 |
- |
- |
- |
452 |
(452) |
- |
|
Dividends |
19 |
- |
- |
- |
- |
(4,258) |
(4,258) |
|
Balance at 30 April 2026 |
|
171 |
75,262 |
(3,506) |
(1,329) |
34,508 |
105,106 |
Consolidated Statement of Cash Flows
For the year ended 30 April 2026
|
|
Note |
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Operating activities |
|
|
|
|
Cash generated from operations |
37 |
55,173 |
39,011 |
|
Non-underlying revenue received |
|
247 |
- |
|
Non-underlying operating costs paid |
13 |
(10,773) |
(5,366) |
|
Tax paid |
|
(6,197) |
(5,820) |
|
Contingent acquisition payments |
|
(5,803) |
(2,571) |
|
Net cash from operating activities |
|
32,647 |
25,254 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of subsidiaries (net of cash acquired) |
21 |
(10,199) |
(24,972) |
|
Other loan repayments |
|
2,000 |
500 |
|
Loan interest received |
|
58 |
234 |
|
Purchase of intangible fixed assets |
20 |
(97) |
(83) |
|
Purchase of property, plant and equipment |
23 |
(6,354) |
(11,753) |
|
Proceeds from lease receivables |
26 |
519 |
458 |
|
Disposal of assets held for sale |
22 |
1,271 |
141 |
|
Payment of deferred consideration |
|
(648) |
(2,616) |
|
Disposal of customer list |
|
399 |
- |
|
Proceeds from sale of investment |
|
70 |
- |
|
Net cash used in investing activities |
|
(12,981) |
(38,091) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds of borrowings |
|
49,250 |
52,150 |
|
Repayment of borrowings |
|
(47,650) |
(22,550) |
|
Repayment of debt acquired with current year subsidiaries |
21 |
(1,969) |
(172) |
|
Repayment of debt acquired with prior year subsidiaries |
|
(875) |
(473) |
|
Repayment of lease liabilities |
|
(4,721) |
(4,661) |
|
Landlord capital contribution |
|
430 |
42 |
|
Associated lease costs |
|
(18) |
(306) |
|
Proceeds from exercise of share options |
|
1 |
- |
|
Interest and other finance costs paid |
|
(8,534) |
(6,213) |
|
Purchase of own shares |
|
(1,220) |
(598) |
|
Dividends paid |
|
(4,258) |
(3,903) |
|
Net cash (used in) / from financing activities |
|
(19,564) |
13,316 |
|
Net increase in cash and cash equivalents |
|
102 |
479 |
|
Cash and cash equivalents at the beginning of the period |
|
5,932 |
5,453 |
|
Cash - continuing operations |
|
6,034 |
5,853 |
|
Cash - assets held for sale (note 27) |
|
- |
79 |
|
Total cash and cash equivalents at end of period |
|
6,034 |
5,932 |
Notes to the Consolidated Financial Statements
For the year ended 30 April 2026
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
1. 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 judgements 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 banking facilities of £100,000,000, available until 7 November 2028 (see note 44 for details of new credit facility). 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 its 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 normally 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 |
|
IBB Law LLP |
OC430367 |
|
Birkett Long LLP |
OC334273 |
|
Birkett Long IFA LLP |
OC388956 |
|
Rix & Kay Solicitors LLP |
OC330614 |
|
Le Gros Limited |
10791532 |
The outstanding liabilities at 30 April 2026 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 2026.
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 invoice 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 invoice 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 an invoice 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.
Uninvoiced 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 invoiced in advance of satisfying the performance obligation under the contract.
2.6 Other operating income
Other income
Revenue does not include disbursements. Recoverable expenses incurred on client matters that are expected to be recovered and are invoiced during the period are recognised in other income.
Interest received on client deposits
Interest received 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-issues 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.
Under the equity method, a joint venture investment is initially recorded at cost and then adjusted for the investor's share of the venture's profits or losses. These are recognised in the statement of comprehensive income, while dividends received reduce the carrying value of the investment.
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 Consolidated Statement of Cash Flows. Onerous lease payments of both principal and interest are included in non-underlying operating activities in the Consolidated 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 Consolidated 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 a 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 Other reserve (previously 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 other 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:
|
Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments |
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 |
The full impact of IFRS 18 and IFRS 19 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 2026 was £13,766,000 (2025: £12,836,000).
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 2026 the Group had total dilapidation provisions of £6,132,000 (2025: £6,726,000) (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 £54,264,000 (2025: £50,998,000), a 3% change in the estimated recovery of all matters would impact the profit for the period by approximately £2,047,000 (2025: £1,895,000).
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 £25,012,000 (2025: £27,960,000). 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% |
4 |
(15) |
|
WACC and IRR |
9.6 - 9.7% (1) |
Increase by 5% |
81 |
(176) |
|
Length of customer relationships |
4.9 - 15.0 years |
Increase of 5 years |
8 |
296 |
(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 and professional services 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 £82,283,000 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 FY27, the current forecast of revenue from the Group's existing business and a full year of revenue from acquisitions made during the year ended 30 April 2026, with an element of organic growth in FY28 and FY29. The long-term growth rate of 2% (2025: 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, hence there are no relevant categories into which revenue can be disaggregated.
The transaction price allocated to unsatisfied performance obligations of contracts at 30 April 2026 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.
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Revenue - underlying |
207,729 |
161,966 |
|
Non-underlying revenue |
247 |
- |
|
Revenue |
207,976 |
161,966 |
Non-underlying revenue relates to revenue generated from IBB Law LLP, a subsidiary of Knights which operated a criminal law business. This subsidiary was held as an asset for sale at 30 April 2025 and has been disposed of during the period.
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Other income |
1,028 |
811 |
|
Bank interest on client monies |
9,747 |
8,838 |
|
|
10,775 |
9,649 |
8. Staff costs
The average monthly number of employees (including executive directors) of the Group was:
|
|
Year ended 30 April 2026 Number |
Year ended 30 April 2025 Number |
|
Fee earners |
1,333 |
1,079 |
|
Other employees |
330 |
275 |
|
|
1,663 |
1,354 |
The aggregate remuneration comprised:
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Wages and salaries |
107,399 |
84,380 |
|
Social security costs |
13,842 |
9,452 |
|
Other pension costs |
4,842 |
3,829 |
|
Share-based payment charges |
1,315 |
1,200 |
|
Other employment costs |
1,347 |
1,018 |
|
Aggregate remuneration of employees |
128,745 |
99,879 |
|
Redundancy costs and share-based payment charges analysed as non-underlying costs |
(2,026) |
(2,272) |
|
Non-underlying staff costs (note 13) |
(453) |
- |
|
Underlying staff costs in Consolidated Statement of Comprehensive Income |
126,266 |
97,607 |
Directors' remuneration
Companies Act 2006 disclosures
The total amounts for directors' remuneration in accordance with Schedule 5 to the Accounting Regulations were as follows:
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Salaries, fees, bonuses and benefits in kind |
1,415 |
1,000 |
|
Money purchase pension contributions |
15 |
14 |
|
|
1,430 |
1,014 |
The number of directors to whom benefits are accruing under money purchase pension schemes is 1 (2025: 1).
The remuneration of the highest paid director was:
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Salaries, fees, bonuses and benefits in kind |
643 |
380 |
|
Money purchase pension contributions |
- |
14 |
|
|
643 |
394 |
9. Share-based payments
The Group issues equity-settled share-based payments to its employees. The Group recognised total expenses of £1,315,000 (2025: £1,200,000) relating to equity-settled share-based payment transactions in the year. Of this, £1,310,000 (2025: £1,195,000) is recognised within staff costs, and £5,000 (2025: £5,000) 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 achieving target underlying EPS values.
|
|
Restricted stock awards |
Performance share awards |
||
|
|
Number |
Weighted average exercise price |
Number |
Weighted average exercise price |
|
Outstanding at 1 May 2024 |
3,542,090 |
0.2 |
238,138 |
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 |
- |
- |
|
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 |
- |
- |
|
Dividend equivalents awarded |
120,831 |
0.2 |
- |
0.2 |
|
Forfeited during the period |
(144,890) |
0.2 |
(549,439) |
0.2 |
|
Exercised during the period |
(288,468) |
0.2 |
- |
- |
|
Outstanding at 30 April 2026 |
4,080,998 |
0.2 |
2,760,000 |
0.2 |
|
Exercisable at 30 April 2026 |
2,590,480 |
0.2 |
- |
- |
The options outstanding at 30 April 2026 had a weighted average exercise price of 0.2p and a weighted average remaining contractual life of 1.9 years. The average share price for options exercised during the year was 136.0p.
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 2025 |
969,300 |
123.8 |
|
Forfeited during the period |
(96,930) |
123.8 |
|
Outstanding at 30 April 2026 |
872,370 |
123.8 |
The options outstanding at 30 April 2026 had a weighted average exercise price of 123.8p and a weighted average remaining contractual life of 1.5 years.
The aggregate of the estimated fair values of the options granted in November 2024 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 is 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 2024 |
123,067 |
177,727 |
30,903 |
|
Granted during the period |
76,141 |
38,053 |
12,216 |
|
Withdrawn during the period |
(22,292) |
- |
- |
|
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 |
|
Granted during the period |
76,760 |
38,378 |
13,083 |
|
Withdrawn during the period |
(23,109) |
(15,190) |
(2,793) |
|
Forfeited during the period |
- |
(6,440) |
- |
|
Outstanding at 30 April 2026 |
230,567 |
201,793 |
50,259 |
|
Unrestricted at 30 April 2026 |
61,658 |
127,440 |
50,259 |
Sharesave Scheme (SAYE)
This is a 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 2024 |
300,547 |
298 |
|
Forfeited during the period |
(135,308) |
300 |
|
Outstanding at 30 April 2025 |
165,239 |
296 |
|
Exercisable at 30 April 2025 |
165,239 |
296 |
|
Forfeited during the period |
(164,023) |
296 |
|
Outstanding at 30 April 2026 |
1,216 |
296 |
|
Exercisable at 30 April 2026 |
1,216 |
296 |
The options outstanding at 30 April 2026 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 2026 is nil. There are 1,216 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 £4,842,000 (2025: £3,829,000) represents contributions payable to the scheme by the Group. As at 30 April 2026, total contributions of £985,000 (2025: £759,000) due in respect of the reporting period had not been paid over to the schemes.
The defined benefit impact is discussed in note 42. There were no charges against income in the year ended 30 April 2026.
11. Depreciation and amortisation charges
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Depreciation |
4,851 |
3,333 |
|
Depreciation on right-of-use assets |
5,761 |
5,223 |
|
Amortisation on computer software |
78 |
92 |
|
Loss on disposal of property, plant and equipment |
9 |
192 |
|
Underlying depreciation and amortisation charges in Consolidated Statement of Comprehensive Income |
10,699 |
8,840 |
|
Amortisation on acquired intangibles |
5,270 |
4,033 |
|
|
15,969 |
12,873 |
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Establishment costs |
10,485 |
8,301 |
|
Short term and low value lease costs |
373 |
62 |
|
Other overhead expenses |
28,406 |
21,476 |
|
|
39,264 |
29,839 |
13. Non-underlying costs
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Contingent acquisition payments treated as remuneration |
8,077 |
3,752 |
|
Transaction costs |
3,469 |
2,277 |
|
Redundancy and reorganisation staff costs |
2,021 |
2,266 |
|
Acquisition lease surrenders |
1,652 |
- |
|
Loss on disposal of intangibles and property, plant and equipment |
1,040 |
315 |
|
Recognition of onerous provisions on acquired contracts |
561 |
750 |
|
Loss on disposal of lease receivable |
492 |
- |
|
Impairment of acquired right-of-use assets |
465 |
2,078 |
|
Other costs relating to disposed subsidiary |
343 |
- |
|
Loss / (Profit) on disposal of right-of-use assets |
62 |
(340) |
|
Share-based payment charges |
5 |
5 |
|
Impairment of acquired software |
- |
352 |
|
(Profit) on sale of freehold property |
(115) |
- |
|
Gain on disposal of customer list |
(1,061) |
- |
|
Non-underlying operating costs |
17,011 |
11,455 |
|
Non-underlying staff costs |
453 |
- |
|
Non-underlying finance costs |
430 |
246 |
|
|
17,894 |
11,701 |
Non-underlying costs cash movement
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Non-underlying costs |
17,894 |
11,701 |
|
Adjustments for: |
|
|
|
Contingent acquisition payments shown separately |
(8,077) |
(3,752) |
|
Non-cash movements: |
|
|
|
(Loss) on disposal of intangibles and property, plant and equipment |
(1,040) |
(315) |
|
Recognition of onerous provisions on acquired contracts |
(561) |
(750) |
|
(Loss) on disposal of lease receivable |
(492) |
- |
|
Impairment of acquired right-of-use assets |
(465) |
(2,078) |
|
Non-underlying finance costs |
(365) |
(246) |
|
(Loss) / Profit on disposal of right-of-use assets |
(62) |
468 |
|
Share-based payment charges |
(5) |
(5) |
|
Impairment of acquired software |
- |
(352) |
|
Profit on sale of freehold property |
115 |
- |
|
Transaction costs |
182 |
(107) |
|
Gain on disposal of customer list |
1,061 |
- |
|
Additional cash movements: |
|
|
|
Rental payments on onerous leases |
1,000 |
435 |
|
Service charge payments on onerous leases |
365 |
128 |
|
Dilapidation payments |
1,223 |
239 |
|
|
10,773 |
5,366 |
Non-underlying costs relate primarily to acquisition related costs or one-off transactions not relating to the core day to day trading of the Group. This includes redundancy costs to streamline the support function of the Group following acquisitions or strategic reorganisations, transaction costs relating primarily to the costs of surrendering acquired contracts and onerous costs in respect of acquisitions (this includes contracts acquired which Knights cannot exit and properties which 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. During the period there was also a profit on the sale of a customer list from an acquired business.
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 employees 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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Interest on borrowings |
5,523 |
4,133 |
|
Interest on leases |
3,005 |
2,312 |
|
|
8,528 |
6,445 |
15. Finance income
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Loan interest receivable |
30 |
239 |
|
Lease interest receivable |
59 |
63 |
|
|
89 |
302 |
16. Auditor's remuneration
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Fees payable to the parent company's auditor and their associates for the audit of the parent company's annual accounts |
60 |
56 |
|
Fees payable to the auditor and their associates for other services to the Group: |
|
|
|
- The audit of the Company's subsidiaries |
190 |
177 |
|
Total audit fees |
250 |
233 |
|
|
|
|
|
- Audit-related assurance services |
26 |
25 |
|
Total non-audit fees |
26 |
25 |
17. Taxation
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Corporation tax: |
|
|
|
Current year |
6,976 |
4,626 |
|
Adjustments in respect of prior years |
(16) |
224 |
|
|
6,960 |
4,850 |
|
Deferred tax: |
|
|
|
Origination and reversal of temporary differences |
(1,459) |
(157) |
|
|
|
|
|
Tax expense for the year |
5,501 |
4,693 |
The charge for the period can be reconciled to the Consolidated Statement of Comprehensive Income as follows:
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Profit before tax |
10,237 |
12,269 |
|
Tax at the UK corporation tax rate of 25% (2025: 25%) |
2,559 |
3,067 |
|
Expenses that are not deductible in determining taxable profit |
3,045 |
1,382 |
|
Partnership tax paid on acquired subsidiaries |
(87) |
20 |
|
Adjustment in respect of prior years |
(16) |
224 |
|
Tax expense for the year |
5,501 |
4,693 |
|
|
|
|
|
Consisting of: |
|
|
|
Taxation - underlying |
8,486 |
7,448 |
|
Tax impact of non-underlying revenue |
62 |
- |
|
Tax impact of non-underlying costs |
(3,047) |
(2,755) |
|
|
5,501 |
4,693 |
The impact of non-underlying costs on the effective rate of tax is set out below:
|
|
Year ended 30 April 2026 |
Year ended 30 April 2025
|
||||
|
|
Total
£'000 |
Underlying |
Non-underlying £'000 |
Total
£'000 |
Underlying |
Non-underlying £'000 |
|
Profit before tax |
10,237 |
33,154 |
(22,917) |
12,269 |
28,003 |
(15,734) |
|
Tax expense |
5,501 |
8,486 |
(2,985) |
4,693 |
7,448 |
(2,755) |
|
Effective rate of tax |
54% |
26% |
13% |
38% |
27% |
18% |
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. During the year, the Group revised its treatment of vested but unexercised share options. Vested share options that are exercisable for little or no consideration, are now included within the calculation for basic EPS as these are considered to represent unconditional equity interests in the Group. Previously, such vested but unexercised share options were not included in the calculation of basic EPS. No adjustment has been made to the comparative period in respect of this change in treatment as the impact was deemed trivial.
|
|
Year ended 30 April 2026 Number |
Year ended 30 April 2025 Number |
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
85,967,308 |
85,950,758 |
|
Weighted average number of share options which are vested not exercised |
2,326,946 |
- |
|
Weighted average shares held in EBT |
(642,956) |
(137,332) |
|
|
87,651,298 |
85,813,426 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
Share options |
3,323,000 |
4,027,011 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
90,974,298 |
89,840,437 |
|
|
£'000 |
£'000 |
|
Profit after tax |
4,736 |
7,576 |
|
Earnings per share |
Pence |
Pence |
|
Basic earnings per share |
5.40 |
8.83 |
|
Diluted earnings per share |
5.21 |
8.43 |
Underlying earnings per share is calculated as an alternative performance measure in note 39.
19. Dividends
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Amounts recognised as distributions to equity holders in the year: |
|
|
|
Final dividend for the year ended 30 April 2025 of 3.05p per share (2024: 2.79p) |
2,604 |
2,396 |
|
Interim dividend for the year ended 30 April 2026 of 1.94p per share (2025: 1.76p per share) |
1,654 |
1,507 |
|
|
4,258 |
3,903 |
For the year ended 30 April 2026 the Board have proposed a final dividend of 3.69p per share (2025: 3.05p per share). The proposed final dividend is subject to approval by shareholders at the AGM 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 9 October 2026. 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 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 |
|
Impairments |
- |
- |
- |
(352) |
(352) |
|
As at 30 April 2025 |
72,893 |
5,401 |
46,344 |
616 |
125,254 |
|
Acquisitions of subsidiaries |
9,187 |
- |
2,464 |
606 |
12,257 |
|
Adjustments |
203 |
- |
21 |
- |
224 |
|
Additions |
- |
- |
- |
97 |
97 |
|
Disposals |
- |
- |
(217) |
(841) |
(1,058) |
|
As at 30 April 2026 |
82,283 |
5,401 |
48,612 |
478 |
136,774 |
|
|
|
|
|
|
|
|
Amortisation and impairment |
|
|
|
|
|
|
As at 1 May 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 |
|
Amortisation charge |
- |
54 |
5,216 |
78 |
5,348 |
|
Eliminated on disposal |
- |
- |
- |
(179) |
(179) |
|
As at 30 April 2026 |
- |
594 |
23,600 |
356 |
24,550 |
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
At 30 April 2026 |
82,283 |
4,807 |
25,012 |
122 |
112,224 |
|
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 |
The carrying amount of goodwill of £82,283,000 (2025: £72,893,000) has been allocated to the single cash generating unit (CGU) present in the business, which is the provision of legal and professional services.
The adjustments to goodwill and customer relationships relate to measurement period adjustments relating to prior year acquisitions.
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 forecasts 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% (2025: 2%). This rate does not exceed the expected average long-term growth rate for the UK legal and professional 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 13.2% (2025: 12.9%).
Revenue growth over the three years of the forecast period reflects, for FY27, the current forecast of revenue from the Group's existing business and a full year of revenue from acquisitions made during the year ended 30 April 2026, and an element of organic growth in FY28 and FY29 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 and professional 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 four acquisitions: Birkett Long LLP, which included Birkett Long IFA LLP, Rix & Kay Solicitors LLP and Le Gros Solicitors Limited. 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 |
3,307 |
|
Goodwill |
9,187 |
|
Gain on bargain purchase |
(8) |
|
Total consideration |
12,486 |
|
|
|
|
Satisfied by: |
|
|
Cash |
10,625 |
|
Deferred consideration arrangement |
1,861 |
|
Total consideration transferred |
12,486 |
|
|
|
|
Net cash outflows arising on acquisition: |
|
|
Cash consideration net of cash acquired |
10,199 |
|
Net investing cash outflow arising on acquisition |
10,199 |
|
|
|
|
Repayment of debt acquired* |
1,937 |
|
Net financing cash outflow arising on acquisition |
1,937 |
|
|
|
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.
*The amount is different by £32k to the amount shown in the Consolidated Statement of Cash Flows due to an additional loan identified during the year in respect of a prior year acquisition.
Birkett Long LLP
On 6 May 2025 the Group exchanged contracts to acquire Birkett Long LLP by purchasing the controlling membership interests of the entity. This acquisition completed on 13 June 2025. Birkett Long LLP 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 |
606 |
1,247 |
1,853 |
|
Property, plant and equipment |
1,220 |
(322) |
898 |
|
Investments |
200 |
- |
200 |
|
Right-of-use assets |
- |
3,369 |
3,369 |
|
Contract assets |
1,501 |
- |
1,501 |
|
Trade and other receivables |
1,850 |
- |
1,850 |
|
Cash and cash equivalents |
14 |
- |
14 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(2,185) |
138 |
(2,047) |
|
Lease liabilities |
- |
(3,369) |
(3,369) |
|
Borrowings |
(656) |
- |
(656) |
|
Provisions |
(802) |
- |
(802) |
|
Deferred tax |
- |
(512) |
(512) |
|
Total identifiable assets and liabilities |
1,748 |
551 |
2,299 |
|
Goodwill |
|
|
7,761 |
|
Total consideration |
|
|
10,060 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
8,371 |
|
Deferred consideration |
|
|
1,689 |
|
Total consideration transferred |
|
|
10,060 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
8,356 |
|
Repayment of debt |
|
|
656 |
|
Net cash outflow arising on acquisition |
|
|
9,012 |
|
|
|
|
|
Intangibles relating to customer relationships of £1,247,000 has been arrived at using the excess earnings method. The goodwill of £7,761,000 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 £4,391,000 and is payable in equal instalments on the first, second and third anniversary of completion.
There are also undiscounted deferred consideration payments totalling £1,849,000 outstanding. This is payable in instalments on the first, second and third anniversaries of completion.
Birkett Long LLP contributed £14,776,000 of revenue to the Group's Statement of Comprehensive Income for the period from 6 May 2025 to 30 April 2026. 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 13 June 2025.
Birkett Long IFA LLP
On 6 May 2025 the Group exchanged contracts to acquire Birkett long IFA LLP by purchasing the controlling membership interests of the entity. This acquisition completed on 13 June 2025. Birkett Long IFA LLP is an independent financial planning business which will further broaden Knights' offering as professional services providers.
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 |
- |
1,067 |
1,067 |
|
Trade and other receivables |
6 |
- |
6 |
|
Cash and cash equivalents |
222 |
- |
222 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(14) |
- |
(14) |
|
Deferred tax |
- |
(267) |
(267) |
|
Total identifiable assets and liabilities |
214 |
800 |
1,014 |
|
Gain on bargain purchase |
|
|
(8) |
|
Total consideration |
|
|
1,006 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
898 |
|
Deferred consideration |
|
|
108 |
|
Total consideration transferred |
|
|
1,006 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
676 |
|
Net cash outflow arising on acquisition |
|
|
676 |
|
|
|
|
|
Intangibles relating to customer relationships of £1,067,000 has been arrived at using the excess earnings method. The gain on bargain purchase of £8,000 has been recognised immediately in the Group's Statement of Comprehensive Income and included within non-underlying operating costs.
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 £282,000 and is payable in equal instalments on the first, second and third anniversary of completion.
There are also undiscounted deferred consideration payments totalling £118,000 outstanding. This is payable in instalments on the first, second and third anniversaries of completion.
Birkett Long IFA LLP contributed £1,018,000 of revenue to the Group's Statement of Comprehensive Income for the period from 6 May 2025 to 30 April 2026. 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 13 June 2025.
Rix & Kay Solicitors LLP
On 27 June 2025 the Group exchanged contracts to acquire Rix & Kay Solicitors LLP by purchasing the controlling membership interests of the entity. This acquisition completed on 1 August 2025. Rix & Kay Solicitors LLP is a law firm which will bolster 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 |
- |
150 |
150 |
|
Property, plant and equipment |
532 |
(84) |
448 |
|
Right-of-use assets |
- |
619 |
619 |
|
Contract assets |
703 |
- |
703 |
|
Trade and other receivables |
891 |
- |
891 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(1,598) |
619 |
(979) |
|
Lease liabilities |
- |
(619) |
(619) |
|
Borrowings |
(605) |
(676) |
(1,281) |
|
Provisions |
(450) |
- |
(450) |
|
Deferred tax |
- |
(38) |
(38) |
|
Total identifiable assets and liabilities |
(527) |
(29) |
(556) |
|
Goodwill |
|
|
1,155 |
|
Total consideration |
|
|
599 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
599 |
|
Total consideration transferred |
|
|
599 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
599 |
|
Repayment of debt |
|
|
1,281 |
|
Net cash outflow arising on acquisition |
|
|
1,880 |
|
|
|
|
|
Intangibles relating to customer relationships of £150,000 has been arrived at using the excess earnings method. The goodwill of £1,155,000 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 £270,000 and is payable in equal instalments on the first, second and third anniversary of completion.
Rix and Kay Solicitors LLP contributed £2,337,000 of revenue to the Group's Statement of Comprehensive Income for the period from 27 June 2025 to 30 April 2026. 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 1 August 2025.
Le Gros Solicitors Limited
On 15 August 2025 the Group exchanged contracts to acquire Le Gros Solicitors Limited by purchasing the controlling membership interests of the entity. This acquisition completed on the same date. Le Gros Solicitors Limited is a law firm which built upon our organic entry to Cardiff earlier in the year.
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 |
|
|
|
|
Property, plant and equipment |
4 |
(2) |
2 |
|
Contract assets |
51 |
- |
51 |
|
Trade and other receivables |
406 |
- |
406 |
|
Cash and cash equivalents |
190 |
- |
190 |
|
Liabilities |
|
|
|
|
Trade and other payables |
(91) |
- |
(91) |
|
Provisions |
(8) |
- |
(8) |
|
Total identifiable assets and liabilities |
552 |
(2) |
550 |
|
Goodwill |
|
|
271 |
|
Total consideration |
|
|
821 |
|
|
|
|
|
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
|
|
757 |
|
Deferred consideration |
|
|
64 |
|
Total consideration transferred |
|
|
821 |
|
|
|
|
|
|
Net cash outflow arising on acquisition: |
|
|
|
|
Cash consideration (net of cash acquired) |
|
|
568 |
|
Net cash outflow arising on acquisition |
|
|
568 |
|
|
|
|
|
The goodwill of £271,000 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. No intangibles have been recognised in relation to customer relationships.
A contingent consideration arrangement was entered into as part of the acquisition. This is contingent on the seller 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 £175,000 and is payable in equal instalments on the first, second and third anniversary of completion.
There are also undiscounted deferred consideration payments totalling £71,000 outstanding. This is payable in instalments on the first, second and third anniversaries of completion.
Le Gros Solicitors Limited contributed £464,000 of revenue to the Group's Statement of Comprehensive Income for the period from 15 August 2025 to 30 April 2026. 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 15 August 2025.
22. Investments
|
|
Joint ventures £'000 |
Other investments £'000 |
Total £'000 |
|
At 1 May 2025 |
83 |
28 |
111 |
|
Acquired |
- |
200 |
200 |
|
Investment income |
795 |
- |
795 |
|
Disposed |
(58) |
(28) |
(86) |
|
Reclassified as held for sale |
- |
(200) |
(200) |
|
At 30 April 2026 |
820 |
- |
820 |
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 2026 was £3,610,000. A share of net assets of £771,000 has been recognised in the Group during the year as the first £1,040,000 of profits in each financial year are allocated to the key management personnel of Convex. Following this, the Group are entitled to 30% of the remaining profit share.
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 exited this investment and recognised a final share of net assets of £37,000.
As part of the Birkett Long acquisition, the Group acquired an investment in respect of Meridies Insurance Company Limited. 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 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) |
|
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 |
|
Acquisitions of subsidiaries |
435 |
399 |
- |
402 |
112 |
- |
3,988 |
5,336 |
|
Additions |
4,101 |
- |
- |
1,568 |
685 |
- |
1,743 |
8,097 |
|
Disposals |
(126) |
- |
- |
(679) |
(80) |
- |
(6,981) |
(7,866) |
|
Reclassification to held for sale |
- |
(808) |
- |
- |
- |
- |
- |
(808) |
|
As at 30 April 2026 |
25,070 |
- |
380 |
8,975 |
4,533 |
91 |
66,007 |
105,056 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment |
|
|
|
|
|
|
|
|
|
As at 1 May 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 |
|
Depreciation charge |
2,677 |
8 |
4 |
1,708 |
431 |
23 |
5,761 |
10,612 |
|
Eliminated on disposal |
(1) |
- |
- |
(490) |
(8) |
- |
(2,990) |
(3,489) |
|
Impairment |
- |
- |
- |
- |
- |
- |
465 |
465 |
|
Reclassification to held for sale |
- |
(13) |
- |
- |
- |
- |
- |
(13) |
|
As at 30 April 2026 |
7,238 |
- |
12 |
5,336 |
1,028 |
80 |
23,858 |
37,552 |
|
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
At 30 April 2026 |
17,832 |
- |
368 |
3,639 |
3,505 |
11 |
42,149 |
67,504 |
|
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 |
Net impairment charges of £465,000 (2025: £2,078,000) 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 2026 |
54,264 |
31,282 |
(125) |
|
At 30 April 2025 |
50,998 |
30,639 |
(130) |
|
At 30 April 2024 |
40,191 |
25,931 |
(188) |
The movement during the year is not separately identifiable.
Contract assets
Contract assets consist of uninvoiced revenue in respect of legal and professional services performed to date.
Contract assets in respect of fee-for-service and fixed fee arrangements are invoiced at appropriate intervals, normally on a monthly basis in arrears, in line with the performance of the services. Where such matters remain uninvoiced 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 invoiced 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 invoiced until a later financial period. The amount of contingent fee work in progress at 30 April 2026 was £13,766,000 (2025: £12,836,000).
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 £2,255,000 (2025: £6,316,000) were acquired in business combinations.
An impairment loss of £69,000 has been recognised in relation to contract assets in the year (2025: £48,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The contract asset loss is estimated at 0.3% (2025: 0.2%) of the balance.
Trade receivables
Trade receivables are recognised when an invoice 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.
Invoices are payable within thirty days of date of issue unless otherwise agreed with the client.
Contract liabilities
When matters are invoiced 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 2026 £'000 |
30 April 2025 £'000 |
|
Trade receivables |
34,145 |
32,023 |
|
Impairment provision - trade receivables |
(2,863) |
(1,384) |
|
Prepayments and other receivables |
12,340 |
8,913 |
|
Amount owed from joint venture |
- |
2,000 |
|
|
43,622 |
41,552 |
|
Trade and other receivables |
30 April 2026 £'000 |
30 April 2025 £'000 |
|
> 1 year |
- |
2,000 |
|
< 1 year |
43,622 |
39,552 |
|
|
43,622 |
41,552 |
Trade receivables
The average credit period taken on sales is 30 days as at 30 April 2026 (2025: 31 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 clients, 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 2026 |
30 April 2025 |
|||||
|
|
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 |
19,613 |
71 |
0.36 |
18,287 |
52 |
0.28 |
|
|
1-30 days past due |
2,687 |
16 |
0.60 |
2,765 |
19 |
0.67 |
|
|
31-60 days past due |
1,846 |
14 |
0.76 |
1,933 |
6 |
0.33 |
|
|
61-90 days past due |
433 |
29 |
6.70 |
398 |
1 |
0.33 |
|
|
>91 days past due |
4,875 |
2,301 |
47.20 |
3,740 |
510 |
13.65 |
|
|
12 month ECL £'000 |
29,454 |
2,431 |
8.25 |
27,123 |
588 |
2.17 |
|
In addition to the above on trade receivables a further £432,000 (2025: £284,000) 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:
|
|
2026 £'000 |
2025 £'000 |
|
Balance at 1 May |
1,384 |
763 |
|
Increase in loss allowance recognised in profit and loss during the year |
1,477 |
1,241 |
|
Acquired provisions |
1,315 |
814 |
|
Receivables written off during the year as uncollectable |
(1,313) |
(1,434) |
|
Balance at 30 April |
2,863 |
1,384 |
26. Finance lease receivable
The Group sub-leases floors in five 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 2026 £'000 |
30 April 2025 £'000 |
|
Less than one year |
382 |
457 |
|
One to two years |
353 |
457 |
|
Two to three years |
240 |
457 |
|
Three to four years |
164 |
436 |
|
Four to five years |
49 |
151 |
|
More than five years |
24 |
73 |
|
|
1,212 |
2,031 |
|
Less: unearned finance income |
(74) |
(291) |
|
|
1,138 |
1,740 |
|
|
|
|
|
Finance lease receivable |
30 April 2026 £'000 |
30 April 2025 £'000 |
|
> 1 year |
787 |
1,335 |
|
< 1 year |
351 |
405 |
|
|
1,138 |
1,740 |
Total lease payments received for the year ended 30 April 2026 was £519,000 (2025: £458,000).
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 overdue 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 service line, which is considered non-core to Knights, would be reviewed following completion. On 18 July 2025, the Group completed the sale of the crime business. There is a profit of £20k included within non-underlying costs in respect of the sale (note 13).
Other assets and liabilities held for sale
During the year Knights reclassified as held for sale an unlisted investment and two freehold properties acquired as part of business combinations in the current and prior year. The freehold properties were subsequently sold during the year, as well as an existing unlisted investment. At 30 April 2026, there remain two unlisted investments that the Group has committed to disposing its share of, these are expecting to be exited within the next 12 months.
|
Assets held for sale |
IBB Crime |
Other investments £'000 |
Total £'000 |
|
At 1 May 2025 |
1,100 |
183 |
1,283 |
|
Reclassified |
(741) |
995 |
254 |
|
Disposals |
(359) |
(971) |
(1,330) |
|
Adjustments |
- |
(70) |
(70) |
|
At 30 April 2026 |
- |
137 |
137 |
|
|
|
|
|
|
Liabilities held for sale |
IBB Crime |
Other investments £'000 |
Total £'000 |
|
At 1 May 2025 |
(889) |
- |
(889) |
|
Reclassified |
889 |
- |
889 |
|
At 30 April 2026 |
- |
- |
- |
28. Share capital
|
|
Ordinary shares |
|
|
|
Number |
£'000 |
|
As at 1 May 2024 |
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 |
|
At 30 April 2026 (allotted, called up and fully paid) |
85,967,308 |
171 |
29. Other reserve
At 30 April 2026, the Group held treasury shares with a total value of £1,329,000 (2025: £576,000). These shares are held to satisfy obligations under the Group's share-based payment schemes and are held within the other reserve.
Throughout the year, the Group purchased 707,839 of its own ordinary shares; the total cost of these purchases was £1,220,000. Additionally, 299,824 shares were transferred out of the other reserve to satisfy employee share option exercises. The total cost of shares transferred was £467,000, based on a FIFO costs basis.
|
|
Other reserve |
|
|
|
Number |
£'000 |
|
As at 1 May 2025 |
(479,484) |
(576) |
|
Changes during the period |
|
|
|
Purchase of own shares |
(707,839) |
(1,220) |
|
Own shares issued in respect of exercised share options |
299,824 |
467 |
|
At 30 April 2026 |
(887,499) |
(1,329) |
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 2026 and 30 April 2025:
|
|
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Right-of-use assets |
|
|
|
Property |
41,632 |
46,115 |
|
Equipment |
517 |
520 |
|
|
42,149 |
46,635 |
|
Lease liability |
|
|
|
> 1 year |
45,180 |
48,603 |
|
< 1 year |
5,969 |
5,666 |
|
|
51,149 |
54,269 |
Right-of-use assets include additions and acquired assets of £5,488,000 (2025: £23,250,000) for property and £243,000 (2025: £147,000) for equipment. The related depreciation charge for the year is £5,565,000 (2025: £5,102,000) for property and £196,000 (2025: £165,000) for equipment.
The table below shows lease liabilities maturity analysis - contractual undiscounted cash flows at 30 April 2026:
|
|
30 April 2026 |
30 April 2025 |
||||
|
|
£'000 |
£'000 |
Total £'000 |
£'000 |
£'000 |
Total £'000 |
|
Less than one year |
8,508 |
337 |
8,845 |
8,058 |
202 |
8,260 |
|
One to five years |
27,695 |
610 |
28,305 |
28,731 |
457 |
29,188 |
|
More than five years |
34,456 |
- |
34,456 |
34,434 |
3 |
34,437 |
|
|
70,659 |
947 |
71,606 |
71,223 |
662 |
71,885 |
|
Less unaccrued future interest |
(20,092) |
(365) |
(20,457) |
(17,517) |
(99) |
(17,616) |
|
|
50,567 |
582 |
51,149 |
53,706 |
563 |
54,269 |
The table below shows amounts recognised in the Consolidated Statement of Comprehensive Income for short term and low value leases as at 30 April 2026:
|
|
30 April 2026 |
30 April 2025 |
||||
|
|
|
|
|
|
|
|
|
Expenses relating to short-term and low value leases |
309 |
- |
309 |
61 |
1 |
62 |
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 2026 were £8,902,000 (2025: £7,307,000).
31. Borrowings
|
|
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Secured borrowings at amortised cost: |
|
|
|
Bank loans |
71,000 |
69,400 |
|
Other loans |
476 |
1,282 |
|
Total borrowings |
71,476 |
70,682 |
|
Amount due for settlement within 12 months |
250 |
875 |
|
Amount due for settlement after 12 months |
71,226 |
69,807 |
The above excludes lease liabilities.
All of the Group's borrowings are denominated in sterling.
As at 30 April 2026, the Group had a credit facility of £100,000,000 in total (2025: £100,000,000). The facility remains available until 7 November 2028.
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 Group's option and is due for final repayment in November 2028. 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.
Following the year end, a new credit facility has been agreed. See note 44 for further details.
32. Deferred consideration
|
|
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Non-current liabilities |
|
|
|
Deferred consideration |
1,608 |
563 |
|
|
|
|
|
Current liabilities |
|
|
|
Deferred consideration |
892 |
612 |
Deferred consideration as at 30 April 2026 relates to the acquisitions of Thursfields Legal Limited, Birkett Long LLP, Birkett Long IFA LLP and Le Gros Solicitors 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 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 |
|
Acquisitions of subsidiaries |
166 |
617 |
- |
- |
34 |
817 |
|
Adjustments |
(4) |
5 |
- |
- |
- |
1 |
|
Charge/(credit) for the year |
269 |
(1,373) |
(208) |
(13) |
(134) |
(1,459) |
|
As at 30 April 2026 |
4,057 |
7,455 |
(1,156) |
(101) |
321 |
10,576 |
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 2026 £'000 |
30 April 2025 £'000 |
|
Deferred tax assets |
(1,257) |
(1,036) |
|
Deferred tax liabilities |
11,833 |
12,253 |
|
|
10,576 |
11,217 |
34. Trade and other payables
|
|
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Trade payables |
12,135 |
6,915 |
|
Other taxation and social security |
10,387 |
9,291 |
|
Other payables |
4,733 |
2,675 |
|
Accruals |
8,185 |
7,781 |
|
|
35,440 |
26,662 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 18 days (2025: 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 2026 £4,732,000 of contingent acquisition payments are included within other payables (2025: £2,458,000). The total additional potential value of the contingent liability is £9,293,000 (2025: £12,252,000).
35. Provisions
|
|
Dilapidation provision £'000 |
Onerous contract provision £'000 |
Professional indemnity provision |
Total £'000 |
|
As at 1 May 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 |
|
Acquisitions of subsidiaries |
877 |
- |
383 |
1,260 |
|
Additional provision in the year |
309 |
626 |
1,406 |
2,341 |
|
Utilisation of provision |
(1,780) |
(365) |
(963) |
(3,108) |
|
As at 30 April 2026 |
6,132 |
1,139 |
2,277 |
9,548 |
|
Consisting of: |
|
|
|
|
|
Non-current liabilities |
5,069 |
814 |
- |
5,883 |
|
Current liabilities |
1,063 |
325 |
2,277 |
3,665 |
The dilapidation 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 contract 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 2026 £'000 |
30 April 2025 £'000 |
|
Financial assets |
|
|
|
Amortised cost |
|
|
|
Contract assets |
54,264 |
50,998 |
|
Trade and other receivables (excluding prepayments) |
32,927 |
33,699 |
|
Lease receivables |
1,138 |
1,741 |
|
Cash and cash equivalents |
6,034 |
5,853 |
|
Financial liabilities |
|
|
|
Amortised cost |
|
|
|
Borrowings |
71,476 |
70,682 |
|
Deferred consideration |
2,500 |
1,175 |
|
Trade and other payables |
20,320 |
14,913 |
|
Leases |
51,149 |
54,269 |
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 does 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 2026 would decrease/increase by £357,000 (2025: decrease/increase by £353,000). 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 2026 would increase/decrease by £1,795,000 (2025: increase/decrease by £1,275,000). 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 Group's 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 2026 |
< 1 year £'000 |
1-2 years £'000 |
2-3 years |
Unpaid finance cost £'000 |
Total |
|
Borrowings |
250 |
284 |
70,942 |
- |
71,476 |
|
Deferred consideration |
892 |
974 |
679 |
(45) |
2,500 |
|
Trade and other payables |
25,053 |
- |
- |
- |
25,053 |
|
30 April 2025 |
< 1 year £'000 |
1-2 years £'000 |
2-3 years |
Unpaid finance cost £'000 |
Total |
|
Borrowings |
875 |
585 |
69,222 |
- |
70,682 |
|
Deferred consideration |
612 |
294 |
294 |
(25) |
1,175 |
|
Trade and other payables |
17,371 |
- |
- |
- |
17,371 |
Trade and other payables above exclude other taxation and social security costs.
The Group has met its covenant tests during the year.
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 2026 £'000 |
30 April 2025 £'000 |
|
Borrowings (note 31) |
71,476 |
70,682 |
|
Cash and cash equivalents |
(6,034) |
(5,853) |
|
Net debt |
65,442 |
64,829 |
|
Equity |
105,106 |
104,532 |
|
|
% |
% |
|
Net debt to equity ratio |
62 |
62 |
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Profit before taxation |
10,237 |
12,269 |
|
Adjustments for: |
|
|
|
Non-underlying revenue |
(247) |
- |
|
Non-underlying staff costs |
453 |
- |
|
Amortisation on computer software |
78 |
92 |
|
Amortisation on acquired intangibles |
5,270 |
4,033 |
|
Depreciation - property, plant and equipment |
4,851 |
3,333 |
|
Depreciation - right-of-use assets |
5,761 |
5,223 |
|
Loss on disposal (net of £1,040,000 (2025: £315,000 loss) included in non-underlying costs) |
9 |
192 |
|
Contingent acquisition payments |
8,077 |
3,752 |
|
Other non-underlying operating costs |
8,934 |
7,703 |
|
Non-underlying finance costs |
430 |
246 |
|
Share-based payments (net of £5,000 (2025: £5,000 loss) included in non-underlying costs) |
1,311 |
1,194 |
|
Non-operating income |
- |
(48) |
|
Share of results of joint ventures |
(795) |
- |
|
Finance income |
(89) |
(302) |
|
Finance costs |
8,528 |
6,445 |
|
Operating cash flows before movements in working capital |
52,808 |
44,132 |
|
(Increase) in contract assets |
(862) |
(4,850) |
|
Decrease/(Increase) in trade and other receivables |
312 |
(1,903) |
|
Increase in provisions |
243 |
71 |
|
(Decrease) in contract liabilities |
(5) |
(58) |
|
Increase in trade and other payables |
2,677 |
1,619 |
|
Cash generated from operations |
55,173 |
39,011 |
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 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 |
|
Finance costs |
4,133 |
2,312 |
|
Interest and other finance costs 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 |
|
New borrowings and leases |
49,250 |
2,009 |
|
Acquired borrowings and leases |
2,038 |
3,988 |
|
Interest charged |
5,523 |
3,005 |
|
Interest paid |
(5,724) |
(3,005) |
|
Unpaid interest not applied to principal |
201 |
- |
|
Non-cash movement |
- |
(3,556) |
|
Repayment of debt acquired with current year subsidiaries |
(1,969) |
- |
|
Repayment of debt acquired with prior year subsidiaries |
(875) |
- |
|
Repayments |
(47,650) |
(4,721) |
|
Amounts included in operating activities |
- |
(843) |
|
As at 30 April 2026 |
71,476 |
51,149 |
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Operating profit |
18,311 |
18,600 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Depreciation and amortisation charges (note 11) |
15,969 |
12,873 |
|
Non-underlying operating costs (note 13) |
17,011 |
11,455 |
|
Underlying EBITDA |
51,497 |
42,928 |
|
Depreciation of right-of-use assets (note 11) |
(5,761) |
(5,223) |
|
Interest on leases (note 14) |
(3,005) |
(2,312) |
|
Lease interest receivable (note 15) |
59 |
63 |
|
Underlying EBITDA post IFRS16 charges |
42,790 |
35,456 |
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 on acquired intangible assets and non-underlying items.
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Profit before tax |
10,237 |
12,269 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Amortisation on acquired intangibles (note 11) |
5,270 |
4,033 |
|
Non-underlying operating costs (note 13) |
17,011 |
11,455 |
|
Non-underlying finance costs (note 13) |
430 |
246 |
|
Underlying profit before tax |
33,154 |
28,003 |
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 amortisation on acquired intangible assets and non-underlying items after tax
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Operating profit before non-underlying charges |
40,592 |
34,088 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Share of results of joint ventures (note 22) |
795 |
58 |
|
Finance costs (note 14) |
(8,528) |
(6,445) |
|
Finance income (note 15) |
89 |
302 |
|
Underlying profit before tax |
33,154 |
28,003 |
|
Taxation - underlying (note 17) |
(8,486) |
(7,448) |
|
Underlying profit after tax |
24,668 |
20,555 |
d) Underlying profit after tax (PAT) and adjusted earnings per share (EPS)
Underlying PAT and EPS are 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 after tax
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
|
|
|
|
Profit after tax |
4,736 |
7,576 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Amortisation on acquired intangibles (note 11) |
5,270 |
4,033 |
|
Non-underlying costs (note 13) |
17,894 |
11,701 |
|
Non-underlying tax credit (note 17) |
62 |
- |
|
Tax impact of non-underlying costs (note 17) |
(3,047) |
(2,755) |
|
Underlying profit after tax |
24,668 |
20,555 |
|
Underlying earnings per share |
Pence |
Pence |
|
Basic underlying earnings per share |
28.14 |
23.95 |
|
Diluted underlying earnings per share |
27.12 |
22.88 |
Tax has been calculated at the corporation tax rate of 25% (2025: 25%) and deferred tax rate of 25% (2025: 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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Cash generated from operations (note 37) |
55,173 |
39,011 |
|
Underlying tax paid |
(7,681) |
(5,820) |
|
Net underlying cash outflow for IFRS 16 leases |
(7,207) |
(6,515) |
|
Underlying free cashflow |
40,285 |
26,676 |
|
Underlying profit after tax |
24,668 |
20,555 |
|
Cash conversion (%) |
163% |
130% |
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 2026 £'000 |
30 April 2025 £'000 |
|
Borrowings (note 31) |
71,476 |
70,682 |
|
Cash and cash equivalents |
(6,034) |
(5,853) |
|
Net debt |
65,442 |
64,829 |
40. Capital commitments
As at 30 April 2026 there is a capital commitment of £619,000 (2025: £361,000).
41. Lease commitments
At 30 April 2026, the Group had entered into a non‑cancellable property lease agreement for office premises. The lease was signed in February 2026 and has a contractual commencement date of May 2026.
As the leased property had not been made available for use at the reporting date, no right‑of‑use asset or lease liability has been recognised in these financial statements in accordance with IFRS 16 Leases.
The total future undiscounted minimum lease payments under this agreement, payable after the reporting date, are as follows:
|
|
£'000 |
|
Due within one year |
32 |
|
Due between one and five years |
622 |
|
Due after five years |
886 |
|
Total commitments |
1,540 |
These amounts will be recognised as a right‑of‑use asset and corresponding lease liability from the lease commencement date.
42. 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 LLP where contracts were exchanged on 5 March 2020. Therefore, the disclosures below represent the period of ownership from 5 March 2020 to 30 April 2026. 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 2024. The results of that valuation were updated to 30 April 2026 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 2029. 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.
|
The average duration of the Scheme's obligations is 9 years. |
Actuarial assumptions
Principal actuarial assumptions
|
|
30 April 2026 % |
30 April 2025 % |
|
|
Discount rate |
6.10 |
5.50 |
|
|
Retail Prices Index ("RPI") Inflation |
3.50 |
3.15 |
|
|
Consumer Price Index ("CPI") Inflation |
2.60 |
2.25 |
|
|
Pension increase (LPI 5%) |
3.34 2.23 |
3.05 2.13 |
|
|
Deferred pension revaluation |
2.60 |
2.25 |
|
|
Post retirement mortality |
Males: 90% S3PMA Females: 100% S3PFA (CMI 2025 model) using a long-term improvement rate of 1% |
Males: 90% S3PMA Females: 100% S3PFA (CMI 2023 model) using a long-term improvement rate of 1% |
|
|
Commutation |
100% of members are assumed to take 25% of the 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 |
22.6 |
22.1 |
|
|
Life expectancy at age 65 of female aged 65 |
24.1 |
23.8 |
|
|
Life expectancy at age 65 of male aged 45 |
23.5 |
23.0 |
|
|
Life expectancy at age 65 of female aged 45 |
25.2 |
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 2026 |
Asset allocation at 30 April 2025 |
|
|
Equities and growth assets |
47% |
50% |
|
|
Bonds, LDI and cash |
53% |
50% |
|
|
|
|
|
|
|
|
Value as at 30 April 2026 |
Value as at 30 April 2025 |
|
|
Fair value of assets |
1,840 |
1,982 |
|
|
Present value of funded obligations |
(1,479) |
(1,467) |
|
|
Surplus in scheme |
361 |
515 |
|
|
|
|
|
|
|
The fair value of the assets can be analysed as follows: |
|
|
|
|
|
Value as at 30 April 2026 |
Value as at 30 April 2025 |
|
|
Low risk investment funds |
870 |
984 |
|
|
Credit Investment funds |
570 |
604 |
|
|
Cash |
400 |
394 |
|
|
Fair value of assets |
1,840 |
1,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
30 April 2026 |
30 April 2025 |
|
|
Administration costs |
35 |
39 |
|
|
Net interest on liabilities |
(28) |
(26) |
|
|
Total charge to the Statement of Comprehensive Income |
7 |
13 |
|
|
Remeasurements over the period since acquisition |
|
|
|
|
|
30 April 2026 |
30 April 2025 |
|
|
Loss on assets in excess of interest |
(93) |
(105) |
|
|
Gain on scheme obligation from assumptions and experience |
43 |
127 |
|
|
Loss on scheme obligations due to scheme experience |
(77) |
(21) |
|
|
Gain on scheme obligations from demographic assumptions |
(20) |
- |
|
|
Total remeasurements |
(147) |
1 |
|
|
|
|
|
|
|
The change in value of assets |
|
|
|
|
|
30 April 2026 |
30 April 2025 |
|
|
Fair value of assets brought forward |
1,982 |
2,132 |
|
|
Interest on assets |
105 |
104 |
|
|
Benefits paid |
(119) |
(110) |
|
|
Administration costs |
(35) |
(39) |
|
|
Loss on assets in excess of interest |
(93) |
(105) |
|
|
Fair value of assets carried forward |
1,840 |
1,982 |
|
|
|
|
|
|
|
Actual return on assets |
12 |
(1) |
|
|
|
|
|
|
|
Change in value of liabilities |
|
|
|
|
|
30 April 2026 |
30 April 2025 |
|
|
Value of liabilities brought forward |
1,467 |
1,605 |
|
|
Interest cost |
77 |
78 |
|
|
Benefits paid |
(119) |
(110) |
|
|
Actuarial gain |
54 |
(106) |
|
|
Value of liabilities carried forward |
1,479 |
1,467 |
|
|
|
|
|
|
|
Sensitivity of the value placed on the liabilities |
|
|
|
|
Approximate effect on liability |
|
|
|
|
|
30 April 2026 |
30 April 2025 |
|
|
Discount rate |
|
|
|
|
Minus 0.50% |
71 |
78 |
|
|
Inflation |
|
|
|
|
Plus 0.50% |
55 |
64 |
|
|
Life expectancy |
|
|
|
|
Plus 1.0 years |
44 |
41 |
|
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 LLP when 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 2026 is 1.172%.
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 2026 |
30 April 2025 |
|
|
£'000 |
£'000 |
|
Total assets |
52,800 |
52,500 |
|
Total liabilities excluding expenses |
(51,700) |
(57,200) |
|
Surplus / (Deficit) |
1,100 |
(4,700) |
|
Funding level |
102% |
92% |
Information provided for 30 April 2026 is at 31 March 2026, the latest information available. This is not expected to be materially different from the 30 April 2026 position.
Allocation to the Group
The estimated share of the Scheme liabilities is 1.172%.
Over the year to 30 April 2026, the Section's funding position is a small surplus.
|
|
30 April 2026 |
30 April 2025 |
|
|
£'000 |
£'000 |
|
Estimated cost of providing benefits |
(606) |
(546) |
|
Value of assets |
619 |
502 |
|
Resulting surplus / (deficit) |
13 |
(44) |
|
Funding level |
102% |
92% |
The surplus 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.
43. 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 £801,000 (2025: £606,000) 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.
During the year Knights Professional Services Limited charged KPV Propco Ltd for professional services totalling £nil (2025: £8,000) and a management fee of £20,000 (2025: £20,000). At 30 April 2026, there was an amount of £nil owed by the Group to KPV Propco Ltd (2025: £nil).
During the year Knights Professional Services Limited provided legal services to the directors in an individual capacity of £1,000 (2025: £2,000). At 30 April 2026, there was an amount of £nil (2025: £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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Short-term employee benefits and social security costs |
2,347 |
1,739 |
|
Pension costs |
41 |
37 |
|
Share-based payments |
452 |
182 |
|
|
2,840 |
1,958 |
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 £952,000 (2025: £868,000) were paid in the year in respect of ordinary shares held by the Company's directors.
Transactions with Convex Corporate Finance Limited
During the year Convex repaid their initial loan of £2,000,000 to the Group. Up until this point, interest was charged on the outstanding balance, £30,000 (2025: £239,000) is recognised within finance income. The Group granted Convex a sublease for one of its properties. As at 30 April 2026, a carrying value of £117,000 is recognised within finance lease receivables. This lease expires on March 2029 with £32,000 of rental receipts received in the year. There is also an agreement in place for shared services provided by the Group to Convex. £64,000 (2025: £76,000) is recognised within other operating income. There were no balances owed between the Group and Convex at 30 April 2026.
44. Post balance sheet events
On 3 July 2026, the Group renewed its revolving credit facility with HSBC UK, NatWest and AIB (GB) increasing available credit facilities to £159m (from £100m). Terms and covenants are broadly in line with the previously agreed facility with interest being payable at a margin above SONIA of between 1.65% and 2.65% depending on the leverage level. The facility is committed until 3 July 2029.
On 15 June 2026, the Group exchanged contracts to acquire specific assets of Mayfair Property Law Limited for a total consideration of £1.65million. The acquisition completed and the assets were hived into the Group on the same date.
45. 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 2026 or 30 April 2025 within the meaning of Section 434 of the Companies Act 2006 ("the Act"). The financial information has been extracted from the Group's statutory financial statements for the year ended 30 April 2026. 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 2026 will be filed with the Registrar of Companies following the Company's Annual General Meeting. The financial information for the year ended 30 April 2025 has been extracted from the Group's audited statutory financial statements approved by the Board of Directors on 12 September 2025.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
This document contains certain financial measures that are not defined or separately recognised under IFRS. These measures are used by the Board and other users of the accounts to evaluate the Group's underlying trading performance excluding the impact of any non-recurring items and items that do not reflect the underlying day-to-day trading of the Group. These measures are not audited and are not standard measures of financial performance under IFRS. There are no generally accepted principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company. Accordingly, these measures should be viewed as supplemental to, not as a substitute for, the financial measures calculated under IFRS.
Underlying Revenue
Excludes the Crime business which was acquired with IBB Law (completed on 4 April 2025). This business was non-core, as stated at the time of the acquisition, and we completed its sale on 18 July 2025. The business generated revenue of £0.2m and a loss before tax of £0.6m in the period. The related non-underlying employee costs of £0.5m and operating costs of £0.3m are excluded from the underlying costs of the Group.
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Operating profit |
18,311 |
18,600 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Depreciation and amortisation charges (note 11) |
15,969 |
12,873 |
|
Non-underlying operating costs (note 13) |
17,011 |
11,455 |
|
Underlying EBITDA |
51,497 |
42,928 |
|
Depreciation of right of use assets |
(5,761) |
(5,223) |
|
Interest on leases |
(3,005) |
(2,312) |
|
Lease interest receivable |
59 |
63 |
|
Underlying EBITDA post IFRS 16 |
42,790 |
35,456 |
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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Profit before tax |
10,237 |
12,269 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Amortisation on acquired intangibles (note 11) |
5,270 |
4,033 |
|
Non-underlying operating costs (note 13) |
17,011 |
11,455 |
|
Non-underlying finance costs (note 13) |
430 |
246 |
|
Underlying profit before tax |
33,154 |
28,003 |
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 amortisation of acquired intangible assets and non-underlying items after tax
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Operating profit before non-underlying charges |
40,592 |
34,088 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Non-underlying staff costs (note 13) |
453 |
- |
|
Share of results of joint ventures (note 22) |
795 |
58 |
|
Finance costs (note 14) |
(8,528) |
(6,445) |
|
Finance income (note 15) |
89 |
302 |
|
Underlying profit before tax |
33,154 |
28,003 |
|
Underlying taxation (note 17) |
(8,486) |
(7,448) |
|
Underlying profit after tax |
24,668 |
20,555 |
Underlying Profit After Tax (PAT) and Underlying Earnings per Share (EPS)
Underlying PAT 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 after tax. Underlying EPS is underlying PAT divided by the weighted average number of ordinary shares in issue.
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Profit after tax |
4,736 |
7,576 |
|
Non-underlying revenue (note 5) |
(247) |
- |
|
Amortisation on acquired intangibles (note 11) |
5,270 |
4,033 |
|
Non-underlying costs (note 13) |
17,894 |
11,701 |
|
Tax impact of non-underlying revenue (note 17) |
62 |
- |
|
Tax impact of non-underlying costs (note 17) |
(3,047) |
(2,755) |
|
Underlying profit after tax |
24,668 |
20,555 |
|
|
|
|
|
Underlying earnings per share |
Pence |
Pence |
|
Basic underlying earnings per share |
28.14 |
23.95 |
|
Diluted underlying earnings per share |
27.12 |
22.88 |
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 underlying operating activities after adjusting for underlying tax paid and the impact of underlying 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 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Cash generated from operations (note 37) |
55,173 |
39,011 |
|
Underlying tax paid |
(7,681) |
(5,820) |
|
Total cash outflow for IFRS 16 leases |
(7,207) |
(6,515) |
|
Underlying free cashflow |
40,285 |
26,676 |
|
Underlying profit after tax |
24,668 |
20,555 |
|
Cash conversion (%) |
163% |
130% |
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, acquired debt and cash at bank and in hand. Net debt excludes lease liabilities.
|
|
Year ended 30 April 2026 £'000 |
Year ended 30 April 2025 £'000 |
|
Borrowings (note 31) |
71,476 |
70,682 |
|
Cash and cash equivalents |
(6,034) |
(5,853) |
|
Net debt |
65,442 |
64,829 |
Working Capital
Working capital is calculated as:
|
|
30 April 2026 £'000 |
30 April 2025 £'000 |
|
Current assets |
|
|
|
Contract assets |
54,264 |
50,998 |
|
Trade and other receivables |
43,622 |
39,552 |
|
Corporation tax receivable |
177 |
882 |
|
Total current assets |
98,063 |
91,432 |
|
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(35,440) |
(26,662) |
|
Contract liabilities |
(125) |
(130) |
|
Total current liabilities |
(35,565) |
(26,792) |
|
Net working capital |
62,498 |
64,640 |
Other Definitions
Colleague/Talent Retention/Employee Turnover
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, retirements and redundancies
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/Business support employees
This includes all employees that are not fee earning.
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, compared with the total invoices raised over prior months. WIP (work in progress) days are calculated based on the gross work in progress (excluding that relating to clinical negligence, insolvency 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 invoicing this relates to, based on average fees (again excluding clinical negligence, insolvency and real estate investment income) 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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