Knights Group ends year strongly, acquires Coffin Mew
Knights Group said in an update on Thursday that it expected revenue for the year just ended of £125.5m, up 22% year-on-year, as it also announced the acquisition of Coffin Mew.
The AIM-traded firm said underlying profit before tax was anticipated to be at least £18.1m for the 12 months ended 30 April.
Net debt at year end was expected to be £29m, widening from £21m year-on-year but coming in £2m ahead of analyst expectations, which the board put down to its focus on cash conversion and maintaining “industry-leading” lock-up and debtor days.
In a separate announcement on Thursday, Knights said it had agreed to acquire independent law firm Coffin Mew, providing it with entry into new key markets including Portsmouth, Southampton, Brighton and Newbury, and “significantly expanding” its presence in the south of England.
Under the terms of the acquisition, Knights said it would acquire Coffin Mew from its 12 existing equity partners on a debt-free, cash-free basis, for total consideration of £11.5m subject to working capital adjustments at completion.
That would comprise an initial consideration of £6.5m, made up of £5.5m in cash and £1m of new Knights shares, along with deferred cash consideration of £5m to be paid in £2m instalments on the first and second anniversaries, and £1m on the third anniversary after completion.
The cash consideration would be satisfied from Knights' existing facilities, with completion expected on 8 July.
Knights Group also announced that Richard King was intending to step down as chief operating officer.
The board said that, having put “strong” operational infrastructure in place to support the scaling-up of the business both organically and through acquisition, King had decided to pursue other opportunities and would leave the company on 31 May.
“The group has performed as anticipated in our update in March and we are encouraged by the positive trading momentum we are seeing in the current year,” said chief executive officer David Beech.
“Our reputation, culture and model continue to resonate with top industry talent and we are pleased to see an increased proportion of new recruits joining us from the top 40.
“We have a strong pipeline of acquisition opportunities of quality independent law firms and are delighted to welcome the talented team from Coffin Mew to Knights today, who have built a strong reputation as one of the leading independent law firms in the South East.”
At 1213 BST, shares in Knights Group Holdings were up 32.94% at 125.5p.
Reporting by Josh White at Sharecast.com.