The head of listed firm Knights has said the business could spread to as many as 50 locations as its breakneck expansion continues.
Chief executive David Beech said 2024-25 full-year results posted today show the firm’s strategy is working.
Revenue increased by 8% to £162m with underlying profit up 11% to £42.9m.
However, reported profit before tax for the year ending in April fell 17% to £12.3m, as the cost of continuing acquisitions was factored in. Restructuring costs alone from the acquisitions of IBB Law and Thursfields Legal Limited increased by £1.7m, while net debt increased from £35.2m to £64.8m.
Knights will pay a final dividend of 3.05p per share, representing a 9.3% increase in payouts to shareholders.
Speaking to the Gazette, Beech said the firm borrowed ‘prudently and conservatively’ and at a much lower level compared to private equity-owned firms.
Despite rapid growth since going public in 2018, he predicted there was significant room for further expansion and acquisitions. ‘We have 32 locations and I can easily imagine us being up to 40 or 50 offices,’ said Beech. ‘Our expected revenue next year is £200m. I think we are becoming more known. I hope it continues as we get bigger in regional locations.
‘We are going to keep scaling up, but we have more work to do to get the brand better recognised and understood.’
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Beech, whose remuneration increased from £315,000 to £394,000, said one of the key features of the business was the maintenance of high morale among staff even as so many acquired firms were integrated.
‘We have high engagement with everyone that is joining. More people are positive towards the move. There is a real trend that people are acknowledging the end of the partnership structure – [they] are saying they don’t want to be in an old-fashioned partnership model with people competing for profit share.’
Knights has been open about its business model of cutting support staff when it acquires a new business, and Beech defended the way this is handled.
‘[They key is] being honest, upfront and straightforward about it, doing it quickly and pulling the plaster off straight away. We can’t pay proper money for law firms and have a duplication in finance and IT. We have got to make it cost-effective by getting rid of the costs we don’t need. Being up front and honest about it is the way we deal with it [but] we also help [departing staff] as much as we can.’
Knights is now one of just a handful of remaining listed legal businesses after the likes of DWF, Ince & Co and MJ Hudson returned to private ownership.
Beech said he was ‘not surprised at all’ by so few firms opting to float.
‘You can’t list a partnership where LLP members take the profit – we took six years to build up the company before we listed.’
Knights Group Holdings plc share price increased by 5.76% to 156p following the full-year results announcement.
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