Knights Group Holdings PLC · LSE:KGH
Knights — H1 2022 Earnings Presentation
29 slides from Knights's earnings presentation, January 2022
Slide 1: Half year results
Knights lc Half year results For the half year ended 31 October 2021 Increased scale and national reputation driving sustainable growth January 2022
Slide 2: Company disclaimer
Company disclaimer ‘These presentation slides (the “Slides” have been issued by Knights Group Holdings plc (the "company" The Slides have been prepared by and are the sole responsibilty of the Company. Although all reasonable care has been taken to ensure that the facts stated in the Slides and acco
Slide 3: Scalable business supported by corporatised model
Scalable business supported by corporatised model Premium quality from a competitive cost base Professional advisors with a commercial mindset A scalable model Focus on markets outside London Scale and national reputation underpinning premium position Less competition for talent and lower costs outs
Slide 4: A diversified, premium provider of national scale
A diversified, premium provider of national scale A full suite of services strengthened by sector specialisms and non-legal services (% of total revenues) Real estate Employment (0) 37.5% 17.0% Yo of total revenues YTD October Cone amey) BREEDON 19.0% a INVESTMENTS. vi Dunetnd Currently operating fr
Slide 5: Track record of profitable, cash generative growth
Track record of profitable, cash generative growth 140 129.2 Excellent cash conversion 120 100 48.4% Underlying PBT CAGR 80 60 National scale providing growth opportunities 40 20 38.7% Revenue CAGR 2019 2020 2021 2022 (f)* mRevenue (£m) = Underlying PBT (£m) “The consensus is the average of forecast
Slide 6: Strategy continues to drive sustainable growth
Strategy continues to drive sustainable growth 9 Our corporate structure since 2012 is becoming increasingly relevant and understood 8 Scale and national reputation as premium provider driving organic growth 8 Broadening service offering, providing opportunities to cross-sell Knights plc | Half year
Slide 7: Half year overview — key financial highlights
Half year overview — key financial highlights H1 Revenue +29% (H1 organic growth of 9%) £59, 7™m (HY 2021: £46.2m) Net Debt £23.3m after £7.0m of acquisition consideration and related costs (31 October 2021: £21.1m) (1) A full reconciliation of the und incl up Knights plc | Half year results Underly
Slide 8: Solid financial performance
Solid financial performance Summary income statement (£,000) 31 October 31 October 2021 2020 Revenue 59,730 46,237 Revenue Growth 29.2% 44.6% Other operating income 449 539 Staff costs(’) (37,849) (29,635) Other operating charges?) (10,396) (8,014) Underlying EBITDA 11,934 9,127 Depreciation and amo
Slide 9: Profit progression despite headwinds
Profit progression despite headwinds Underlying PBT Bridge (£m) Investment in property during (0.5) the year, taking ee r (0.4) | advantage of good lease arrangements - | 10 | 6.0 9.0 available Leverage of 5.0 other overheads and support 4.0 staff costs 3.0 2.0 Strong performance 1.0 of acquisitions
Slide 10: Key Performance Indicators
Key Performance Indicators Gross profit margin (%) 50 48.9 49 47.9 : “ ae argin “v 46 46 _—_——— 46 45 44 2020 2021 2022 (0) =@FHY Gross profit margin (%) | =@=FY Gross profit margin (%) 29 i . . HY Revenue Growth Underlying PBT margin (%) (9% organic in H1) 20 18.3 17.8 18 (f)* 18 | 7, a ¢ 16.4 13.0
Slide 11: Balance sheet & liquidity
Balance sheet & liquidity Summary balance sheet £°000 31 October 2021 31 October 2020 30 April 2021 Goodwill and intangible assets Goodwill & other intangibles 75,843 68,331 79,523 arising on acquisitions in the second Right of use asset 39,458 30,388 40,406 half of FY21 year of c£11m Property, plan
Slide 12: Industry leading working capital
Industry leading working capital Progress reducing lockup days of acquisitions Group lockup days* continues to progress _ At acquisition At 31 Oct 21 101 100 140 days 87 days 99 98 165 days 139 days 97 1) s be 96 103 days (iit 94 days $ x 95 ° s 94 122 days OV 109 days 93 92 105 days (REaaIN 87 days
Slide 13: Net debt bridge
30 25 20 15 10 Net debt bridge 0.3 ees 21.1 Net debt at 30 Capex relating Deferred April 21 to acquisitions consideration paid Consideration paid, restructuring and related non underlying costs 6.7) Refurbishment Net cash inflows Net debt at 31 of offices October 21 Net debt at £23.3m increased from
Slide 14: Existing business, organic growth, acquisitive growth, dividend
Existing business Organic growth Acquisitive growth Dividend │
Slide 15: A clear strategy for growth
A clear strategy for growth To cement our position as a leading legal and professional services business outside London: Strategic pillars ® Grow Organically Strategic Acquisitions Scale the Operation Knights plc | Half year results
Slide 16: Leveraging our scale and national reputation
Leveraging our scale and national reputation ) Increased scale and national ) Sticky client base reputation driving credibility yielding cross selling as a premium provider opportunities ) Greater awareness ) New regional clients underpinning recruitment attracted by Knights’ momentum extensive prof
Slide 17: Unique and innovative approach to pricing
Unique and innovative approach to pricing ) Pricing is consistently ) Price training and consistent improving across all leadership resulting in strong 17 offices client retention ) Continual training on ) Offsetting inflation and how to price properly and limited salary cost pressure collect fees e
Slide 18: Broadening our offering to clients — debt advisory
Broadening our offering to clients — debt advisory ) Launched specialist debt advisory offering ) Offers opportunity to cross sell other services ) Attracting talented accountants and corporate bankers from respected institutions ) Offering clients a unique proposition; debt and legal advice from on
Slide 19: Progressing acquisition strategy and pipeline
Progressing acquisition strategy and pipeline ® se RS Our acquisition principles ve Strategic Acquisitions ) Strong cultural fit ) Bolt-ons to provide scale ) Entry into new markets ) New specialisms OTBEVELING ) Focus on quality over quantity Key > Acquisitions in last 12 months £ Total addressable
Slide 20: Archers Law - acquisition in a key growth market
Archers Law - acquisition in a key growth market A direct approach to Knights Motivations to Buy Motivations to -- ) One of the leading independent » Opportunity for growth firms, with strong cultural fit as part of larger Group ) Expand presence in North » Support and investment East market, one of
Slide 21: Bandwidth for sustainable growth
Bandwidth for sustainable growth Expanding number of Client Services Directors — our key executives Lisa Shacklock Manchester, Wilmslow Jessica Neyt Stoke, Chester Mark Beech Cheltenham, Oxford James Christacos Exeter James Sheridan Leeds, Sheffield, York Andrew Pilkington Birmingham, Nottingham, Le
Slide 22: Summary & current trading
Summary & current trading Recruitment remains strong, particularly in the new regions entered through acquisition 4 Good trading expected in H2 against stronger comparative; expect stronger H2 PBT margin given the strength of revenue to leverage cost base Knights plc | Half year results Integration
Slide 23: Appendix
Slide 24: Deferred and Contingent consideration
Deferred and Contingent consideration Deferred consideration | Contingent and Accrued consideration Total (£’000) (£’000) (£’000) Accrued 31 October 2021 913 3,745 4,658 Payable FY22 913 5,152 6,065 FY23 2,657 2,657 FY24 1,600 1,600 P&L charge — non underlying contingent consideration FY22 - 5,872 5
Slide 25: Reconciliation of underlying to statutory measures — PBT
Reconciliation of underlying to statutory measures — PBT Underlying profit before tax (£,000) HY 2022 HY 2021 Profit/Loss before tax 848 (1,137) Amortisation on acquired intangibles 1,900 1,123 Non-underlying operating costs 4,804 6,007 Adjusted profit before tax 7,552 5,993 Knights plc | Half year
Slide 26: Reconciliation of underlying to statutory measures - PAT and EPS
Reconciliation of underlying to statutory measures - PAT and EPS Underlying profit after tax (£,000) / Underlying earnings per share (pence) HY 2022 HY 2021 Loss after tax (1,690) (1,474) Amortisation on acquisition related intangibles 1,900 1,123 Non-underlying operating costs 4,634 5,659 Share-bas
Slide 27: Organic growth calculation
Organic growth calculation £'000 H1 21 H1 22 Income pre FY 21 acquisitions 46,237 50,585 FY 21 acquisition income - 9,145 Total reported income 46,237 59,730 Organic movement £'000 4,348 % 9.4% Organic growth excludes income growth from acquisitions in the year of their acquisition, and for the firs
Slide 28: Leadership team
Leadership team PLC Boar ili: i Central Senior Non Non Exec Jane Pateman managemen Non Exec Director Exec Director Chairman. Kate Lewis Chief Financial Officer Richard King Chief Operating Officer SS SSeS Group Finance Director Knights plc | Half year results 28
Slide 29: Thank you
Knights 0c Thank you Knights plc Registered Office The Brampton Newcastle-Under-Lyme Staffordshire ST5 0OQW Tel: 0344 371 2562
Knights Group Holdings — H1 2022 Earnings Presentation on 6ix