Keystone Law (AIM: KEYS), the fast growing, UK Top 100, challenger law firm, today announces its interim results for the six months ended 31 July 2019 (‘H1-2020’ or the ‘period’).
Financial Highlights
· | Strong revenue growth of 15.3% to £23.0 million (H1-2019: £19.9 million) |
· | Adjusted PBT1increased by 15.4% to £2.7 million (H1-2019: £2.3 million) |
· | Basic EPS rising to 6.3 pence (H1-2019: 5.5 pence) |
· | Robust cash conversion at 90.3% with operating cashflow2 of £2.4 million (H1-2019: £2.2 million) |
· | Interim ordinary dividend of 3.2 pence per share, in line with progressive dividend policy |
· | Special dividend of 8.0 pence per share |
1 Adjusted PBT is calculated utilising profit before tax and adding back amortisation for both periods; for the current year share based payments and one off costs associated with property relocation is also added back.
2 Operating Cashflow is calculated utilising cash generated from operations and deducting repayment of other borrowings; these being property lease payments in respect of the Keystone offices.
Business Highlights
· | Principal1 lawyer recruitment continues to be strong · Number of qualified new applicants rose by 7.5% to 114 (H1-2019: 106) · Principal lawyers accepting offers increased by 24% to 36 (H1-2019: 29) · Number of principals increased by 27 (H1-2019: 25) |
· | Demand for junior support, both through Pods1 and central office employed lawyers, continues to grow: Pod members increased by five and central office lawyers by two |
· | Invested in new office space to deliver more meeting rooms, hot desks and improved lawyer centre |
· | Aligned existing lease to new now hold co-terminus five year leases |
· | Keystone model and brand continues to be increasingly well respected |
· | Performance in the period has been ahead of expectations and this has laid a strong foundation for the rest of the year |
1 Principal lawyers are the senior lawyer who own the service company (“Pod”) which contracts with Keystone. The relationship between Keystone and its lawyers is governed by two agreements: a service agreement (which governs the commercial terms and is between the Pod company and Keystone) and a compliance agreement (which governs the behaviour of lawyers and is between each lawyer and Keystone). Pods can employ more than one fee earner.
James Knight, Chief Executive Officer of Keystone Law, commented: “I am pleased to report another strong set of Interim Results, as reflected by both the Group’s financial and operational performance. The revenue and profit growth has been driven by the ongoing strength of the recruitment activity as we continue to attract high calibre principal lawyers looking to take advantage of the benefits that the Keystone model offers and build their practices. This is providing clear evidence of the Group’s ability to scale and take advantage of the considerable mid-market opportunity.
“The performance of the existing lawyers, together with the strength of the recruitment pipeline at the half year all serve to underpin our confidence in the second half.”
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