Listed firm Knights targets more acquisitions despite debts of £50m

Listed firm Knights is showing no signs of slowing down on the acquisition trail, even though the company’s debts have now passed £50m, it revealed today. 

In a trading statement for the six months to 31 October, Knights said it expects underlying profit before tax to increase by 26% to £14.6m, based on revenue growing by 5.4% to £79.4m. The profit figure does not include expenses such as lease costs for acquired businesses, disposal of acquired assets and contingent acquisition payments. It also does not take account of one-off restructuring costs where support staff at acquired firms have been made redundant.

The half-year results will be announced on 14 January, but Knights has described the first half of the financial year as ‘strong’.

The trading update said net debt was £50.1m at the end of last month, up from £35.2m in April. This followed the payment of almost £9m in deferred and initial acquisition costs.

In September 2024, the group acquired Thursfields Legal Limited, a full legal services business with a national client base, which strengthened its presence in the West Midlands. Knights has made nearly 20 acquisitions since 2018, including in the past three years Baines Wilson, Meade King and Coffin Mew.

The group has agreed with HSBC UK, AIB (GB) and NatWest to extend by one year its revolving credit facility to provide total committed funding of £100m, up from the existing £70m) until November 2027. This extended facility provides the group with ‘significant headroom’ to make more acquisitions as suitable opportunities arise. The group has also brought in 23 senior professionals in the last six months, which it attributes to the growth of its national reputation.

David Beech, chief executive, said: ‘We are encouraged by our strong momentum in recruitment which continues to build as Knights’ national scale and strong reputation are increasingly recognised. These factors, together with our ongoing focus on operational excellence, and early signs of a recovery in corporate and residential housing work, position us well for a strong performance in the second half in line with market expectations.’

The trading update added that last month’s budget, primarily the increase in employers' national insurance contributions, is expected to have an annual cost impact of £2m in the next year.

Shares in Knights Group Holdings plc rose by 5.5% to 113.5p on the announcement. They reached an annual peak of 156p in May.