Growth that does not come from deals

Knights Group Holdings (LSE:KGH), the UK legal and professional services business, is often discussed in terms of acquisitions, and it announced two more in 2026: THP Solicitors, completed in September, and Moore Barlow. Its most recent full-year results, however, also put weight on organic growth, recruitment and in-house technology, which together determine how much of the Business can expand without further deals.

In results for the year to 30 April 2026, published on 6 July 2026, underlying Revenue rose 28% to £207.7m from £162.0m. Organic growth was 7.1% for the year, but the shape was uneven: 2.6% in the first half and 11.8% in the second. The shares were about 164.5p at the close of the 2 November session.

People, retention and working capital

For a professional services firm, organic growth depends largely on recruiting and keeping fee-earning staff. Knights reported 39 new senior recruits during the year, annual churn of 10% and an employee net promoter score of plus 46, a measure of how likely staff are to endorse the firm as an employer. It did not give a total fee-earner headcount in the results announcement.

Working capital also improved slightly. Lock-up days, the time taken to turn work into cash, fell to 84 from 86, with debtor days at 30 against 31 and work-in-progress days at 54 against 55. Small improvements in lock-up matter because they release cash that can fund recruitment without additional borrowing. Net Debt was £65.4m at the year-end, broadly unchanged from £64.8m despite about £17m of acquisition-related payments, and the company increased its revolving Credit Facility to £159m from £100m, committed until July 2029.

Profitability and the technology platform

Underlying profit before tax rose 19% to £33.2m from £28.0m, but the underlying Margin fell to 16.0% from 17.3%, while underlying EBITDA rose 20% to £51.5m, with its margin falling to 24.8% from 26.5%. Underlying Basic Earnings Per Share rose 17% to 28.14p, while reported basic earnings per share fell to 5.40p from 8.83p, a gap that reflects items excluded from the underlying measures. The board proposed a final Dividend of 3.69p, bringing the total for the year to 5.63p, up from 4.81p.

Knights (LSE:KGH) also described what it called a security-first approach to artificial intelligence. It said it has built its own tools for client onboarding, workflow management and offboarding, and is developing client contracting and billing on the same platform. The company has not quantified the savings or revenue effect of these tools.

Why it matters, and the risks

The second-half acceleration in organic growth is the most significant figure for assessing whether the model can grow without relying on acquisitions. One half-year of faster growth does not by itself establish a trend, however, and the first-half rate of 2.6% shows how variable organic performance can be. The narrowing margin indicates that recruitment and integration costs have, so far, grown faster than profit from new revenue.

Legal services Demand is also linked to the wider economy, particularly property and corporate transactions. Integrating THP and Moore Barlow could divert management attention and make like-for-like comparisons harder. Technology Investment carries execution risk, and the benefits management expects from in-house AI tools remain unproven in the reported figures.

What to watch next

In its July results statement the company reported a positive start to the year and said it expects continued organic growth alongside acquisitions. The next detailed disclosure is the half-year result for the six months to 31 October 2026; no date has yet been announced, but last year's interim results were published on 12 January 2026. Investors are likely to look at the split between organic and acquired revenue, the pace of senior recruitment and any further movement in lock-up days.